Lynne Featherstone: I would say that the problem is far more widespread than the right hon. Gentleman suggests.In response to a recent survey, I received more than 1,000 complaints, an awful lot of which were not only about delivery times but lost and stolen mail. What is the Minister going to do to deal with the Royal Mail, which is not delivering for local people?

Jim Fitzpatrick: I do not disagree with the principle that my hon. Friend outlines of entitlement to appropriate annual leave. Indeed, we have just concluded consultation on ensuring that workers are entitled to their eight days of bank holidays aswell the four weeks for which we legislated in 1998. I know that some discussions are continuing between unions and the oil companies. We clarified the jurisdictional dispute that held up resolution to the disagreements and we hope that, as a result of doing that on 1 October, sensible discussions can take place between employee representatives, the oil companies and other companies that work offshore, so that they can arrive at satisfactory agreements for their staff.

Jim Fitzpatrick: My hon. Friend ably describesthe frustration of many involved in the industryabout the inability to determine the nature of the agreement. We passed the amendment to the regulations on 1 October to clarify the jurisdictional difficulties that prevented proper negotiations. We do not believe that we have a role in negotiating what the leave arrangements should be but we felt that we had a role in clarifying the leave entitlements under law. Although it is early days yet, and we await the November employment tribunal judgment, we hope that, once it is out of the way, the employers and employee organisations can reach agreements that are satisfactory to both. We will not intervene in those negotiations but we are watching them carefully.

Ian McCartney: I thank the hon. Gentleman for his very fair comments. I will write to him on this matter, because I have taken up this issue with representatives of the industry and I am having discussions with them now. I will come back to the hon. Gentleman andthe House with further information, following the conclusion of those discussions.

Ian McCartney: Despite my background as a politician, I am not much of a gambler myself. The industry employs tens of thousands of people in this country, and is well regulated. I recognise, however, that some individuals do have gambling problems, and that the consequences for them and their families are indeed great. We will certainly keep a close eye on the industry, as the hon. Gentleman requests, to ensure that it not only operates effectively but provides services to give support and assistance to those who have gambling problems.

Angela Eagle: To return to credit card debt, while I welcome the activities that the Minister has outlined as attempts to give people who are already in difficulty guidance to get out of it, does he agree that the way the different credit cards are advertised—often in a misleading manner—makes it much harder for consumers who are inexperienced in relation to the existing 30,000 credit cards to make rational decisions? They often get ripped off and end up paying high interest for borrowing small amounts of money. Will he outline his views on how that could be dealt with?

Ian McCartney: There is no answer to that.
	I assure my hon. Friend the Member for Wallasey (Angela Eagle) that I am in discussions with APACS—the UK payments association—as are my officials, about the best-practice guidelines. Then we can take the matter forward. Indeed, in only the last few days I met with the vice-chair of Barclays bank, who is, on behalf of the industry, keen to work with the Government to bring forward such proposals.
	Those guidelines will give security in terms of an understanding across the industry of what best practice is and ensure that competition does not lead to overly complex and difficult situations for the consumer of those products. Therefore, I am quite confident that, along with the industry itself, the best-practice guidelines can be amended in such a way that, for example, the appropriate checks on a customer's ability to pay and checks between the industries will lead to us not having credit limits that are difficult to meet due to their complexity for the consumer who wants to have a credit card limit increased, or indeed wants to havea credit card in the first place.

Dennis Skinner: But what advice will my right hon. Friend give to the family sheltering under that green tree, who propose to get £21 billion in debt and do not have the money to finance it?

Ian McCartney: My hon. Friend alludes to the shadow Chancellor's banana republic report on public expenditure cuts and massive tax incentives for the very rich in society. Indeed, it is a recipe for economic disaster, but what do you expect? This is just another Tory leader with the same old Tory policies.

Margaret Hodge: My hon. Friend the Minister for Energy has responsibility for the steel industry and will take that on board. In general, we have had discussions with the construction industry, and a construction commitment has been signed not only by construction companies but all suppliers, such as architects and quantity surveyors, to ensure that we use the opportunity of the Olympics to improve our construction practices and showcase the best of British construction as we build facilities.

Philip Davies: But is it not disgraceful that we are no longer able to determine our own trade policy? Surely our future prosperity as a country is dependent on promoting our own freer trade policies with countries such as China, rather than being shackled by some inward-facing, backward-looking protection racket. Why does the Secretary of State think that our future prosperity is best decided by the unelected and unaccountable Peter Mandelson in Brussels, rather than by our Government deciding our own trade policies?

Vincent Cable: Is it true that, as has been reported, the British Government have agreed to support protectionist higher tariffs onAsian footwear in return for Italian support for postponement of the working time directive? If it isnot true, will the British Government be votingagainst those protectionist measures in the Council of Ministers?

Alistair Darling: There are two points. I think the hon. Gentleman will recognise that nothing will happen to the WTO talks and the Doha round before the United States Congressional elections in the next few weeks. After that—in our view and, I believe, in the view of all involved—it is essential for the American Government, the European Union and, indeed, all the other players to become seriously engaged. Without movement from all parties the talks will not succeed, and while the price of success is immense, there is a huge cost to be paid if the talks fail.
	We are prepared to support regional or bilateral trade agreements, but they must be complementary to an overall settlement. Multilateral agreements are far better, and regional or bilateral agreements cannot be seen as a substitute for them. But to the extent that they are considered to be complementary, we certainly support them.

Geoffrey Clifton-Brown: The Secretary of State will be aware that the EU's share of world trade decreased and its deficit widened by 7 per cent. in the first quarter of this year. Surely these unfair, discriminatory tariffs will only serve to make the position worse. Is it not true that the only effect they are likely to have is people paying more for their shoes in the shops? Does the Secretary of State agree with Alisdair Gray of the British Retail Consortium that they will not save a single job in the EU? What representations is he making to his friend Peter Mandelson to end this situation?

Alistair Darling: As I said, discussions about tariffs on imported shoes took place throughout the summer, and the vote took place about two weeks ago. As I just told the hon. Member for Twickenham (Dr. Cable),the British Government's position is on the record. However, I agree that we must aim to break down trade barriers. Protectionism is disastrous for trade and industry in the medium and the long term, and we should be ensuring that we can secure as much trade as possible. Europe will depend on it, and this country depends on it. Our approach has always been to take a very liberal view, and I hope that we shall have cross-party support for that.

Bob Russell: If he will make ita requirement for companies considering relocation overseas to consult the Department, regional development agencies and the local community.

Margaret Hodge: Again, I share the concern that my hon. Friend has expressed on behalf of his constituents and those who work for the company. I am happy to meet him to discuss the particulars of the situation that he faces. In the end, companies take commercial decisions. What we need to do, and are doing in the Companies Bill that is currently before the House, isto ensure that we have the conditions in the UK to encourage sustainable investment that will bring jobs to the UK and add wealth to the economy.

Malcolm Wicks: I know of a number of good voluntary sector schemes, including one in Croydon, which I visited recently. Although we expect most of the waste to go local authority sites—we are consulting on that—voluntary organisations are important in making sure that the products can be reused and sold on relatively inexpensively, often to low-income groups. Non-governmental organisations have a vital role.

David Taylor: One of the largest categories of long-term illness and disability is made up of those suffering from mental ill health. When I talk to groups in my constituency, they report that, despite a transformation in social attitudes to mental ill health, there remain serious problems in terms of returning to the work place and the difficulties that people encounter in having their applications treated fairly. Will the Minister say whether he agrees and, if he does, what he hopes that our Government will do to tackle that?

Ruth Kelly: Last month, I published an action plan, in response to the women and work commission recommendations, that setout a comprehensive package of measures across Government that I believe will widen women's choices, enable more women to realise their potential and reduce the gender pay gap.

Diana Johnson: In Hull and the sub-region, women still face many barriers in the field of employment. Whatis my right hon. Friend doing to encourage more employers to take up best working practices and to break down some of those barriers?

Ruth Kelly: As the hon. Lady knows, I have regular discussions with the Chancellor of the Exchequer on this and many other issues. She will also know that we do have a target for reducing gender inequality. As part of the Budget process, we try to ensure that womenare treated fairly and we are making real progress in tackling inequality and the gender pay gap, in particular. I hope that she is also aware of the latest action that we have taken through the women and work action plan, which not only builds up exemplar employers, but introduces equality reps and a quality part-time work initiative and sets out the measures that the Government are going to take, including extending the right to request flexible working.

Ruth Kelly: I suggest that the careers advice that pupils are given should emphasise the importance of pay progression and the opportunities that will be available to those young people. I have been tryingto encourage girls to consider non-traditional occupations, which they might ultimately find more rewarding in every sense—personally fulfilling, as well as financially rewarding. The Government have introduced a national standard for careers advice to make sure that top-quality careers advice is offered throughout our schools and colleges.

Meg Munn: The promotion of science, engineering and technology comes under the Office of Science and Innovation. The Minister for Science and Innovation meets regularly with the chair of the ETB. I am pleased to report that the board and the UK resource centre for women in science, engineering and technology are developing a memorandum of understanding to promote the role of women in science, engineering and technology. I met Annette Williams, the director of the UK resource centre, this week to discuss progress.

Anne Begg: For13 years, Aberdeen has hosted a science festival called Techfest at the beginning of each September. The festival is aimed predominantly at schoolchildren, although events are also held for adults. May I invite my hon. Friend to come up next September to see what is happening in Aberdeen, the excitement on the children's faces—boys and girls—and the way in which all businesses have been supportive of the festival and engaged with young people to get them interested in science in the first place?

Meg Munn: I can give the Government's absolute commitment to bringing forward the regulations as soon as possible. I will certainly take back the suggestion of draft regulations, but our priority must be to lay the regulations in Parliament, alongsidethe religion and belief regulations, and get them implemented next April.

Ruth Kelly: We made clear earlier this month our intention to implement the sexual orientation regulations next April. As my hon. Friend the Under-Secretary of State for Communities and Local Government has just set out, we will lay the regulations before the House in good time for them to be debated and approved so that they can come into effect on that date, alongside the regulations on religion and belief.

Desmond Turner: I reiterate the call for the orders to be published in draft form before they are laid in Parliament. That could lead to a much more sensible and rational debate when the time comes. I cannot emphasise too strongly my agreement with the words of my colleague the hon. Member for Buckingham (John Bercow). Any excessive exemptions granted in the orders would undermine the principle that Parliament has adopted.

Jack Straw: The business for next week is as follows:
	Monday 23 October—Motion to approve a Ways and Means resolution on the Safeguarding Vulnerable Groups Bill  [Lords], followed by remaining stages of the Safeguarding Vulnerable Groups Bill  [Lords].
	Tuesday 24 October—Consideration of Lords amendments to the Police and Justice Bill.
	Wednesday 25 October—Remaining stages of the Charities Bill  [Lords], followed by proceedings on the Parliamentary Costs Bill  [Lords], followed by proceedings on the Wireless Telegraphy Bill  [Lords].
	Thursday 26 October—Remaining stages of the Fraud Bill  [Lords], followed by motion to approve a European document relating to A Citizens' Agenda—Delivering Results for Europe, followed by a debate on the Department for International Development's White Paper on a motion for the Adjournment of the House.
	Friday 27 October—The House will not be sitting.
	The provisional business for the following week will include:
	Monday 30 October—Consideration of Lords amendments to the Violent Crime Reduction Bill.
	I know that colleagues on all sides of the House want notice of recess dates as early as possible. Until we have made a decision about September sittings, which will be before Prorogation, I cannot give all the dates, but for the convenience of the House let megive the Commons calendar until February 2007.We plan to rise for the Christmas recess on Tuesday19 December and return on Monday 8 January. Forthe February constituency week, the House will riseon Thursday 8 February and return on Monday19 February. This is, of course, subject to the progress of business.

Theresa May: I thank the Leader of the House for telling us the business for next week and the available recess dates.
	On Tuesday, the House debated a motion to refer two statutory instruments to a Standing Committee. The Deputy Leader of the House battled valiantly to respond to the points raised by my hon. Friend the Member for Eddisbury (Mr. O'Brien), but the debate masked a serious issue about House business. Since 1997, well over 30,000 statutory instruments have been laid before this House. The Government are increasingly changing the law through the use of such secondary legislation, which is rarely debated, and, if it is, usually it is for only about an hour and a half in Committee and often after it has come into force. That smacks of Government arrogance, and it also potentially lays the House open to be a laughing stock. For example, the statutory instrument to set up the new strategic health authorities will be debated next week. It was laid in June and came into force on 1 July, and the authorities started working on 1 October. Little wonder that the Deputy Leader said that if the House failed to pass that legislation
	"The consequences would be dire."—[ Official Report,17 October 2006; Vol. 450, c. 846.]
	Will the right hon. Gentleman review the use of secondary legislation and make a statement to the House?
	The Leader of the House has in the past said that he wants to make sure that parliamentary questionsare answered in a helpful and timely fashion.  [Interruption.] He says "Yes," or "Hear, hear" from a sedentary position. My right hon. Friend the shadow Home Secretary has been waiting for the answer to no fewer than 43 written questions to the Home Office since 8 July, which is more than three months. I fully appreciate that the Home Secretary might find it inconvenient to answer the questions, but that is to do with the failure of Government policy. The delay is simply not good enough. Does the Leader agree, and will he ensure that those questions are now answered promptly?
	On 11 September, the Minister for Policing, Security and Community Safety issued a written ministerial statement on the operation of control orders. He did not say that there had been any breaches to the orders or risk to the public. Why not? Although the failure to mention that might not have been a breach of the letter of the requirement on Ministers, it certainly was a breach of the spirit of the agreements made when control orders were introduced. May we have a statement from the Home Secretary on that?
	Earlier this week, the chief executive of the NHS said that he does not know how many job cuts there will be in the NHS this year—which, of course, according to the Health Secretary is the best year ever for the NHS. We believe that 20,000 jobs will be lost, and NHS employers say that it could reach 20,000. The only people who do not seem to know are the Government. When will the Health Secretary publish a figure for Members?
	Yesterday, a petition of 4 million signatures was handed to No. 10 highlighting the fact that the withdrawal of the Post Office card account will lead to yet more post office closures. It was reported this morning that the Minister with responsibility for employment relations and postal services said that
	"it is important that there is a successor to the Post Office card account. And there will be and the DWP are in negotiations. There does need to be a clear statement from Government to give reassurance."
	When will the Secretary of State for Trade and Industry make that statement to the House?
	Tomorrow, the House will consider a Bill proposed by my hon. Friend the Member for Tunbridge Wells (Greg Clark) to change the definition of brownfield land and to stop garden-grabbing, which is a problem throughout the country. Will the Government come off the fence and support the Bill, and, if necessary, introduce such a Bill in Government time in the next session?

Jack Straw: Let me deal with those points in turn. Anyone listening to the right hon. Lady would think that the Labour Government had invented secondary legislation. Secondary legislation is a fact of British parliamentary life. More than 50,000 statutory instruments were introduced under the Administration that she supported, before 1997. I accept that the way in which the House is able to deal with statutory instruments is not as satisfactory as it should be, but there is an inherent problem to do with the management of Government time. There is alsothe simple truth that we cannot in any legislation—her Government did not do it, and we cannot do it—anticipate every change in ministerial power when the primary legislation is introduced. I am very happy—we all are—to discuss and think about changes in the management of statutory instruments to the benefit of the House and good governance.
	I suggest that she offer some practical ideas that the Conservatives would be willing to introduce, were they in government.
	My right hon. Friend the Secretary of State for the Home Department is very concerned indeed about the huge backlog of parliamentary questions. Ever since he took office in May, he has been working very hard with his colleagues to clear the backlog, which in part arose—I do not complain about this—from the massive increase in the number of questions as a result of the foreign prisoners problem. However, I will of course follow up the issue that the right hon. Lady raises.
	We have been up hill and down dale on the issue of control orders, and I have looked at what the Minister in question said on 11 September. There was no disingenuity whatsoever about the statement that was made—as, indeed, the right hon. Lady accepted when she had to resort to saying that at least she could not complain about the letter of what was said. The Home Office has been as open as it can be when breaches have taken place.
	Let me deal with the two issues that the right hon. Lady raised concerning the national health service and the Post Office. I know that she is running a scare story that 20,000 people in the NHS are going to be sacked. If she looks at the detail, she will see that, so far, the number of redundancies in the health service, particularly compulsory ones, is tiny. She always forgets to acknowledge that since 1997 the number of NHS staff has gone up by 303,000—a huge increase on the very poor start that we inherited in 1997. The implication of what she is now saying about the NHS is that more should be spent on it, and the implication of what she is saying about post offices is that, in addition to the £2 billion in subsidies that we have already spent, more should be spent. The question for her and for the whole of the Tory party is how on earth they can square that with their promise to cut taxes by between £20 billion and £30 billion—

Jack Straw: The hon. Gentleman asked about FOI, but I completely reject his contention that the spirit of the legislation and its effect have been undermined by the possibility that charges will be introduced. In case he has forgotten, I remind him that I introduced the Bill when I was Home Secretary, and that it contained a power to allow for charges. I do not recall any Front Benchers objecting to that power. However, a slight anomaly exists at present. If the hon. Gentleman were to apply, under the data protection legislation, to a public authority for information about himself, he would almost certainly be charged, whereas he would not be charged if he applied for information about the hon. Member for North Southwark and Bermondsey (Simon Hughes), who is sitting next to him. The hon. Member for Somerton and Frome may not wish to be burdened with that information, but that is certainly something of an anomaly. The Government are justly proud of the FOI Act, but we must ensure that its provisions do not undermine good administration in other respects.
	The hon. Member for Somerton and Frome will know that my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs has been determined to sort out the problem with the Rural Payments Agency. The situation is very unsatisfactory, as today's NAO report highlights, but I understand that farmers are now receiving payments in almost every case.
	The hon. Member for Somerton and Frome asked about cluster bombs. Like my right hon. Friend the Secretary of State for Defence, and his predecessor, I have always acknowledged that we must be extremely careful in the use of cluster bombs. That has been the British Government's policy.
	The hon. Member for Somerton and Frome asked about Northern Ireland legislation, but I simply did not follow his point. We all know about our responsibilities to Northern Ireland, and we have to ensure that the agreement is pinned down. If it is, we will meet the requirement for there to be legislation before 24 November. That will be sorted out through the usual channels.

Jack Straw: I am almost dumbstruck. More does need to be done in respect of violent crime, and it would be extremely helpful if the Liberal Democrats voted for such proposals. They have failed to vote for almost every measure that would help to control crime in the past 10 years—[ Interruption.]

Jack Straw: I will certainly pass on my hon. Friend's concern to my right hon. Friend the Secretary of State for Culture, Media and Sport, aka the Secretary of State responsible for dealing with the BBC. I accept the need for a debate and understand my hon. Friend's case for it to be on a substantive motion, although I cannot promise to provide that. He will acknowledge that, when possible, I have introduced greater use of substantive motions because that is the way forward instead of basing subject debates entirely on Adjournment motions.

Bernard Jenkin: I am sure that the Leader of the House well knows that it is a serious matter for a senior service chief to put himself publicly at variance with Government policy. I believe that most hon. Members are more concerned aboutthe unreasonable pressures on the armed forces and the lives of our troops than the pressure of business in the House. May we have a debate on the consequences of General Sir Richard Dannatt's remarks either on a Friday or on the Monday before the state opening of Parliament? The matter is urgent and should not have to wait nearly a month for a day in what is effectively Opposition time, which would have happened anyway, and will be cluttered with many other subjects that people want to raise.

[Relevant document: The Twenty-eighth Report from the Joint Committee on Human Rights, Session 2005-06, Legislative Scrutiny: Fourteenth Progress Report,HC 1626.]
	 As amended in the Standing Committee, further considered.

Jonathan Djanogly: If the Minister will give me half a chance, I will certainly come to that.
	The Government have not listened to the overwhelming consensus in the business and financial communities. They have reintroduced the clause, yet they have not taken the time to carry people with it by considering a suitable compromise between the two sides that would suit all parties. I am at a loss to understand why the Government have been so last minute with these provisions. It is therefore essential that important stakeholders' views be heard on the general principles behind the clauses. We have received comments from organisations such as the Association of Investment Trust Companies and the Investment Management Association.
	A number of other stakeholders are also against the introduction of the clauses, including the CBI, whose October briefing states:
	"At House of Commons Committee stage, we opposed the re-introduction into the Bill of provisions or powers to require mandatory disclosure by institutional investors as to how they have exercised their voting rights. CBI members accept that there can be practical problems involved in exercising voting rights by some investors but consider that much has been achieved in recent years by market participants working to resolve the problems. Disclosure of voting is an area where several institutional investors are already disclosing their actions and so we do not see the regulatory need for these Bill provisions. In the absence of deletion of these provisions"—
	as is proposed by amendment No. 434—
	"there should be full public consultation on any proposal to implement any proposals under the powers taken"
	in the Bill. That is what we are proposing in amendment No. 435.
	This request has also been made by the Investment Management Association, which states that the reintroduction of the clause as drafted would run counter to the Government's aim of reducing Government red tape. The IMA, while supporting transparency, believes that it would be counter-productive to make this the subject of statutory regulation. The IMA's briefing sets out the reasons why the new clause should be opposed:
	"The voluntary system is working and increasing numbers of managers are making certain of their voting records public."
	The briefing provides a lot of statistics to back that up, stating that many more managers than in the past are making their voting records public by putting details of how they have voted on their websites, and that mangers such as Fidelity Investments and, recently, Hermes have also stated their intention to do this. It goes on:
	"All this clearly shows that the 'culture of secrecy' in the asset management industry that some have claimed exists, does not."
	The IMA is also concerned that
	"a 'one-size-fits-all' requirement would undermine progress. As well as looking at the number of managers that disclose, the survey analysed voting details published on web-sites. This showed a wide variation in the matters reported, indicating the complexity of this matter and the difficulty of introducing regulations that would require uniform disclosure. In effect, imposing a 'one-size-fits-all' legislative requirement would undermine the progress made to date."
	The IMA also believes that the
	"introduction of an enabling power could bring this voluntary progress to a halt. Managers considering public disclosure would face the dilemma that if they went ahead in advance of regulation they could face the expense of completely changing their systems, and incurring costs all over again, when regulations are introduced. A number have already told us that they have shelved disclosure plans for this reason."
	The IMA states that
	"Government-mandated disclosure would be costly. The Regulatory Impact Assessment published with the draft clauses...addressed the ongoing costs of disclosure. It did not address the costs of: setting up systems; determining whether voting rights have actually been exercised; vetting the information; and monitoring compliance with legal requirements. These costs are likely to be significant."
	As we can see, the IMA has made some serious points.
	The Association of British Insurers believes
	"that the principle of transparency is right. Market forces are, unsurprisingly, supporting the development of voluntary transparency in this area and reflecting this, major institutional investors including ABI members...are all making their voting information public."
	However, the ABI also believes that
	"the costs of legislating in this area have been underestimated and since statutory rules would impose a very significant regulatory and compliance burden that would dwarf any benefits. Indeed, it would be likely to lead to less considered voting, as resources are devoted to legal compliance or to the outsourcing of both decision-making and disclosure functions. The possibility of introducing future requirements under the reserve powers of the Bill could deter those companies seeking to voluntarily disclose voting information."
	There is a growing movement among many in the investment management community voluntarily to disclose how they vote. Hermes, one of the country's largest and most successful fund managers, has now taken this step. It is the 12th largest UK fund manager to decide to publish its entire voting record at annual shareholder meetings, and many others have alsodone so.
	The Conservatives welcome this voluntary disclosure. We are in favour of business moving towards greater transparency of its own accord, rather than of the Government issuing edicts from on highas to how investment managers should act. Self-regulation from the bottom up will always be more effective than forced regulation from the top down in this complicated area. The Conservatives fully support transparency from institutions, towards their own investors and towards third-party stakeholders. We welcome the sector's move towards voluntary disclosure and encourage it to go further. An open and transparent institution is likely to be a successful one, but if an institution wishes to maintain secrecy with its investors, that should be its choice, and we should respect that. People do not have to invest with it.
	A good middle view on this matter was put forward by the ABI, which has stated:
	"The proposed clauses provide sweeping and ill-defined reserve powers which provide little, if any, intimation of their purpose or of their justification of being in the public interest. They are targeted in a discriminatory way, imposing duties on certain types of shareholder whilst leaving others unaffected. This is a violation of the principle of equal treatment of all shareholders."
	The ABI goes on to state:
	"For example, the clauses do not apply to important categories of investor such as hedge funds and overseas holders. Their stake is nowadays frequently as large, if not larger, than that of traditional UK institutional investors. If the latter should disclose their voting record in the public interest, then surely this should be an obligation on the former. As the requirement is constructed, it appears to be UK institutions and their clients who will have to bear the costs of disclosure...Furthermore, the clauses as drafted would require disclosure by fund managers even when they are passing on voting instructions on behalf of their clients. Where these clients have different views the fund manager's public disclosure would show that it gave instructions to vote for, against or abstain on the same resolution. It is evident that disclosure of this nature will frustrate the presumed purpose of these provisions, to inform those with an interest in a particular fund how the shares in which they have an actual interest have in fact been voted."
	The ABI briefing goes on to state:
	"Clause NC433 (4)(a) allows any person to whom disclosure should be provided to institute civil proceedings if this does not happen. If it is intended that the obligation will be to publish information, this means that any member of the public would be able to instigate legal action against a shareholder or fund manager even though that member of the public has no interest in the shares in question."
	The ABI concludes:
	"The practical effect of introducing regulations is likely to be to reduce the quality of institutional shareholder engagement with companies—a process which can add real value to the beneficiaries' holdings. Institutions will become less concerned with considered voting as their resources are switched instead to compliance with these complex disclosure requirements. There will be an increase in outsourcing of voting decisions to proxy lodgement agencies, and in some cases, a decision to refrain from voting as a conscious policy in all but exceptional circumstances."
	That is pretty forthright stuff.
	Let us be clear: what we are being told by those independent bodies that represent people in the industry is that the effect of the Government proposals will be fewer institutions being likely to vote so that they do not have to disclose how they voted or intend to vote.
	In addition to transparency, an important issue, which is not covered by these clauses, is participation. We in the Conservative party very much want to encourage institutions to vote and participate. That the effect of these Government provisions could be to replace participation with non-voting is, to our mind, a potential disaster. In reality, the Government are addressing the wrong issue with these provisions. Our amendment would reconcile those views and find a middle way.
	As we have made clear, the Government's threats of compulsion are cack-handed and over-regulatory. Accordingly, we have tabled new clause 15, which seeks a compromise that would be acceptable to all parties. We support institutional investors having to disclose whether they have voted, rather than how they have voted, although, as I have said, we support more institutions declaring voluntarily how they have voted, after the event.
	That is why the amendment would require institutions to publish whether, rather than how, they had voted. That in turn would enable institutions to show engagement in the companies in which they invest. Individuals and larger funds whose moneys are managed by those institutions could take more part in running the company that they part own. The cause of shareholder democracy would be advanced in a non-heavy-handed manner, whereas if the provision is left as it is, there will be a real danger that some institutions do not vote at all to avoid having to disclose how they would have voted.
	We believe that that would defeat the purpose of the clause by preventing institutions from engaging with companies, so we take this opportunity to warn the Government that this potential disaster is what we shall face if the clause is left intact. Over recent days, the Minister seems to have been saying that if the institutions continue to move towards voluntary disclosure, the clause might not be needed and might not be enforced by the Government. We have to say that that threat approach is counter-productive, and indeed sounds arrogant to those who are subject to its provisions.
	I hope that the Government will now see reason on those provisions and simply get rid of them, as proposed through our amendment No. 435.

Margaret Hodge: I must say first to the hon. Member for Huntingdon (Mr. Djanogly) that this is not a last-minute idea. These provisions were in the Bill when they were introduced, but were overturned in the House of Lords. We reinstated them in Committee. They have been part of the Bill from the start.
	I have to say further, to all hon. Members, that a theme running through the Bill is our attempt to ensure better shareholder engagement. We think that this is part of it. The hon. Gentleman, in a very lengthy contribution, quoted every business organisation he could—the CBI, the ABI et al—and I found it extremely difficult to work out whether he was working in the spirit of what his leader said—that is, whether the hon. Gentleman was standing up for business or willing to stand up to it in the interest of shareholders. I could not get it at all.
	On the other hand, the contribution made by the hon. Member for Cambridge (David Howarth) was perfectly valid, and I hope to give him the undertaking that he wants. We want a practical scheme and we want to ensure that we do not have a one-size-fits-all approach. We also want a proper cost-benefit analysis and consultation, although not in the terms of the amendment. This is a good move—a reserve power that will not allow again, in the words of the hon. Member for Huntingdon, an institution that wants to maintain secrecy to do so. We do not think that is appropriate. We would rather back shareholders in this instance.
	There are people who appear to oppose transparency of voting on principle. That seems to me pretty fundamental, so it was good that Lord Hodgson said in Committee in the Lords that
	"shareholders whose shares are held through nominees or are managed on their behalf are entitled to know what is being done with the shares that they own."—[ Official Report, House of Lords, 25 April 2006; Vol. 681, c. GC69.]
	I could not agree more. They are entitled, which means that the entitlement goes to the shareholders, not the companies. Nor is that an isolated view. The hon. Member for Huntingdon talked about a number of business interests, but John Bogle, the founder of the $500 billion Vanguard funds group, has said:
	"Vanguard's founding principles stand for the simple proposition that it is the duty of an agent to faithfully serve his principal...Viewed in this light, it would seem self evident that each Vanguard Fund shareholder has the right to know how the shares of the corporations in his or her portfolio are voted".

Jonathan Djanogly: The two examples given by the Minister relate to the relationship between the institution and the people investing in it. But the concerns relate more to the third parties who want to see the institution's policies.

Michael Weir: Is not another argument that many institutions, such as pension funds, are very big, andit would be much cheaper for them to put the information on their website for those who are interested, rather than having to go back to all the investors in that institution?

Margaret Hodge: Indeed. In discussions that we had about information being given by companies to indirect shareholders, the companies made it clear that they preferred to use e-information channels. I suppose that the hon. Member for Huntingdon would make a distinction between reports and accounts and, for instance, information on voting on particular resolutions. I cannot, however, follow the qualitative difference between the two that would lead to secrecy on one and openness on the other. I therefore agree completely with the intervention of the hon. Member for Angus (Mr. Weir).
	The important principle of openness must be underpinned by clear benefits. What are the benefits? First, it can only increase the confidence of savers in the governance being exercised on their behalf by institutional investors, that they are engaging with companies and that they are doing that well.
	Secondly, greater transparency makes institutional investors more accountable for the governance decisions that they make on behalf of savers, providing stronger incentives to cast votes and to do so thoughtfully. It will put more pressure on institutional investors to explain their decisions. That cannot be a bad thing. The hon. Member for Huntingdon used the argument—I cannot remember whether it was from the ABI—that this would encourage uninformed voting decisions. How can that be right? An institution that chose to vote unthinkingly would be exposed to ridicule. Why would it choose to do that, when delegating decisions to a fund manager or using a voting advisory service are simple options to ensure considered voting?
	Thirdly, greater transparency will help institutional investors manage potential conflicts of interest arising from voting decisions, thus deterring decisions that might benefit the institutional investor rather than savers. Such conflicts can influence behaviour. Research by the university of Michigan using data acquired under the American disclosure rules found that business ties between the institutional investor and a company made it more likely that the investor would vote with the company's management. That is natural, but not right, and transparency would reduce that risk.
	Fourthly, greater transparency enhances shareholder engagement between institutions and investee companies, which is one of the key objectives of the Bill. Again, it has been argued that that will harm behind-the-scenes engagement. Of course, some discussions are more effective behind closed doors. But if a company knows beforehand why an institution is not supporting a resolution, how does disclosure after the fact of the vote cause damage? And if it did so, why are a dozen major UK institutional investors, including institutions such as the Pru and Standard Life, making voluntary disclosures of their voting records?
	Of course, there are important issues to deal with in designing the disclosure regime. I accept that it must be cost-effective, and we are confident that it will be. The disclosure data in question are already available, as required by the industry's own best practice guidelines. Institutions that already publish voting records, such as Co-operative Insurance Services, confirm that the costs are not excessive, and John Bogle said that they were a "drop in the bucket". That might be why there is a strong existing trend towards voluntary disclosure, which the hon. Member for Huntingdon accepted. In the UK, of 35 major fund managers, the number making voluntary disclosures has increased from two in 2003 to 10 in 2005, and two more have now joined them. Alternatively, the reason might be pressure from clients. A recent survey among pension fund trustees found nine out of 10 agreeing that fund managers should publicly disclose their votes.
	I am also encouraged by the growing number of international precedents. The US in 2003, followedby Canada, have mandated voting disclosure. In the US, that covers 3,700 mutual funds with approximately $2 trillion of investments, and it has been implemented without the dire consequences that the hon. Member for Huntingdon predicts for the UK. Action is also being contemplated in South Africa and France.
	During the passage of the Bill, it has been interesting to note that fewer people are saying that disclosure is wrong in principle. I do not think that the hon. Member for Huntingdon is saying that. Increasingly, people are saying, "It's a good thing, but you don't need the power, it's going to happen anyway". Even the industry may be moving that way, if the vigorous debate on a voluntary disclosure regime is anything to go by. But the argument goes the other way. If it is going to happen anyway, why is there all this angst about taking a power? The positions adopted by the Opposition and others are inconsistent.
	In the Government's view, taking the power is still necessary. While we are keen to see how market practice evolves before considering a mandatory regime, we need back-up if the voluntary movement does not deliver. Of course, there will be a full consultation and cost-benefit analysis, and parliamentary approval through the affirmative procedure, to ensure that any mandatory regime is proportionate. The case for disclosure of voting is clear. We want to work with all stakeholders to make sure that we achieve that sensibly and practically, at least cost. This power lets us do that, and I ask the hon. Member for Huntingdon to withdraw his amendment.
	Amendment No. 435, to which the hon. Member for Cambridge referred, would require the Government to consult and undertake cost-benefit analysis on regulations. I have already made clear that we will do that. Do we need a provision in the Bill that tells us to do that? Our view is that we do not. Consultation on such proposals is in line with normal practice and Government guidance. We have made a formal commitment—I have done so today two or three times—to full public consultation. In the circumstances, we think it unnecessary to introduce such a requirement in the Bill. I note that an amendment in the other place that would have had a similar effect was withdrawn after the Government gave its assurance.
	New clause 15 would require the institutions to which the disclosure applies to disclose on a website whether they had exercised voting rights attaching to shares. They would have to make the disclosure in respect of each opportunity to exercise such rights. The new clause suggests that we share common ground on the principle of introducing provisions governing institutional investor voting, and we welcome that acknowledgment. We also agree with the logic behind the requirement for website disclosure. As was suggested by the hon. Member for Angus, that may be the best way of ensuring that disclosure is cost-effective. However, the new clause interacts with clauses 1241 to 1244, and two problems may arise.
	First, the new clause makes compulsory the disclosure of certain information on the exercise of voting rights. That means that the Government would not have flexibility to adjust the requirement—as suggested by the hon. Member for Cambridge—even if that was supported by the results of consultation and analysis. Secondly, in the absence of clause 1244, the new clause would limit disclosure to whether or not voting rights had been exercised. The Government would not be able to require the disclosure of information about how the votes had been cast. That would prematurely restrict the scope of the Government's flexible enabling power before we had consulted on the best way in which to achieve a proportionate disclosure regime.
	I believe that the knowledge of how votes were intended to be cast is important to understanding how the institutional investor is exercising ownership responsibilities. However, I do not want to prejudgethe outcome of the consultation to which I have committed us.
	I do not consider the new clause, as drafted, to be appropriate. I hope that the hon. Member for Huntingdon will not press it or his amendments to a Division, and that he will support the more flexible and principled route that the Government have taken.

David Howarth: Briefly, we take the same view as we did on the previous group of amendments. In principle, we favour the Government view on extending the permission—it is only a permission, not a duty—to disclose information in civil proceedings abroad in favour of consumers, rather than just litigants in intellectual property disputes. That strikes us as rightin principle. The hon. Member for Huntingdon (Mr. Djanogly) has a point about the importance of proper consultation on the detail of any regulations, but we accept that the result of such consultation will be very similar to the consultation undertaken over the summer on these very provisions. We take the Government's rather than the Conservatives' viewon that.

Margaret Hodge: This is the second group of amendments on which I have to tell the Conservative Opposition that they are increasingly sounding as though they are standing up for business rather than standing up to it on behalf of consumers. We have proceeded as we have because the provisions are not just about how businesses can get information, but about how consumers can secure the informationthat they will need to seek redress. The breadth ofour consultation over the summer with all stakeholders—we talked to business organisations, consumer representatives and enforcers—led us to believe that while business had its own perspective, a more balanced view should include consumers among those who have the right to information for redress. I wish that the hon. Member for Huntingdon (Mr. Djanogly) would withdraw his amendmenton that.

Mr. Deputy Speaker: With this it will be convenient to discuss the following: Amendment No. 440, in page 251, line 32, leave out 'knowingly or recklessly' and insert 'dishonestly or fraudulently'.
	Government amendments Nos. 447 and 448.
	Amendment No. 684, in clause 503, in page 243,line 22, at end insert—
	'(4A) Wit the exception of the audit fee, an auditor or auditors of a public company must not be a party to any transaction in the financial statements.'.
	Amendment No. 686, in clause 505, in page 244,line 7, at end insert ', and
	(c) they serve a maximum of five consecutive years'.
	No. 759, in clause 509, in page 246, line 17, at end insert—
	'(2A) The auditor's report must be accompanied by a statement stating the regulatory action, if any, taken against the firm or any member of the audit team during the preceding five years, together with the outcomes.'.
	Government amendments Nos. 213, 225, 449and 519.

Justine Greening: In speaking to amendmentsNos. 439 and 440, I return to the subject of the auditor offence proposed in the Bill. At this point, I declare an interest: I am a chartered accountant, as I pointed out yesterday, and I spent my formative years as an accountant auditing a wide variety of companies, many in Britain and some in other European countries.
	Clause 521 will enable an auditor to be prosecuted if he or she has acted knowingly or recklessly to cause
	"a report under section 509...to include any matter that is misleading, false or deceptive in a material particular".
	In Britain, about 700,000 audits are carried out annually. To my knowledge, they are carried out professionally, and largely show no indication of behaviour by auditors that would need to be tackled by the proposed new criminal auditor offence. As my hon. Friend the Member for Huntingdon (Mr. Djanogly) noted yesterday, we have debated the proposals not only in the House, but at a breakfast briefing in the City last week. At that event, I challenged the Minister for Industry and the Regions to tell us how many auditors she believed would be prosecuted under the new offence. I hesitate to put words in her mouth but, from memory, she suggested that there would be only one or two auditors whose behaviour would have to be dealt with via the offence. That sounds like taking a sledgehammer to crack a nut, especially given the existing law on negligence and fraud.

Justine Greening: In Committee, we argued about the fine legalities of the meaning of the offence in relation to existing law. I am not going back down that track;I am trying to get more information from the Government about the cost of the offence to business and the audit profession.
	I was talking about the decisions that auditors may need to take about following up an anomalous matter. If they believe that the matter is immaterial, they may take no further action and will continue with the remainder of the audit. However, there is no doubt that once the new offence is in place, such immaterial issues will be chased up—just in case. Audit companies will not take the risk of being accused of not following up something that may subsequently become a material issue. That will take more time, but it will also take more resources, so my final point about the effects on the audit process is that audits will be more costly because audit work will need to be broader to prove that all anomalies discovered—not just potential material anomalies—are followed up adequately.

Margaret Hodge: The hon. Lady has referred twice to remarks that I made at a breakfast meeting at which she and I were both present. I just want to put the record straight in the House. I said that, of the 700,000 or so audits that take place a year, most are carried out scrupulously by auditors, with diligence and honesty. However, that does not mean that we do not need an offence to assure ourselves that all audits are carried out scrupulously, diligently and honestly. Most people do not commit murder, but that does not mean that we do not have an offence on the statute book to prosecute people who do. Her argument is spurious.

Vera Baird: I have great respect for Baroness Noakes, but after she made those comments we explored in greater depth what the extent of criminality was, as the hon. Member for Cambridge (David Howarth) has made clear. It appears that I satisfied the hon. Lady's colleagues, as none of them is here to support her today. She should look at what Baroness Noakes said in the context of the issue having been more fully explored by us in Committee. I doubt that Baroness Noakes would say what she said then if she had heard our argument in Committee.

Justine Greening: I have, of course, spoken with Baroness Noakes and she is pretty comfortable with her initial comments. The Minister did take some time to run through the Government's rationale for this offence, stating that, in her opinion,
	"Good auditors who behave honestly have nothing to fear".—[ Official Report, Standing Committee D, 13 July 2006;c. 725.]
	But even having said that, when I asked about the issue of auditors occasionally making mistakes—given that they are human—and following up anomalies, she said: "If he"—the auditor—
	"was in any doubt, the safest thing would be to checkthings through".—[ Official Report, Standing Committee D,13 July 2006; c. 724.]
	Surely that is the heart of the problem. That is why audit costs will rise if this offence is passed today. The Minister said so in Committee. Will she agree to assess the impact of this aspect of the Bill once we are, perhaps, two years into its operation, and will she agree to revisit the offence if it proves to lead to unnecessary and disproportionate rises in audits costs for businesses?
	Moreover, to return to the intervention that was made by the hon. Member for Great Grimsby (Mr. Mitchell), given that audits are carried out by teams of people, ranging from the audit junior to the assistant manager, the manager, the director, and the partner, in practice it could prove difficult to establish which team member committed the offence. I presume that we could have a situation in which several auditors on a team would be prosecuted simultaneously because it was not clear where exactly in the team the "knowingly and recklessly" behaviour associated with the offence took place. In Committee, I expressed my doubts and said that that might be a fatal flaw. Before that is brushed off by the Minister, I refer again to the corporate manslaughter legislation, which had a fatal flaw and ultimately proved entirely ineffective in the courts because of that flaw, to the extent that the House—I think today—has had to set up another Committee to look at a fresh version of that legislation. Perhaps the Minister can comment on how she expects that it would be assessed which audit team member should be prosecuted. Does she expect that multiple prosecutions of team members might arise?

Justine Greening: The hon. Gentleman brings me neatly on to what I was about to say. AmendmentsNos. 439 and 440 would substitute the words "knowingly or recklessly" with "dishonestly or fraudulently". They would thus prevent the litigation risk from being excessively increased for auditors, in line with his comments about alignment with our understanding of the concept of fraud in current law.
	Although our amendments would leave an auditor offence in place, they would take away the negative by-products to which the clause as drafted will lead, such as companies having to put up with auditors over-auditing under the new law compared with what they would have otherwise done under the current law in order to be comfortable with declaring accounts to be true and fair.
	Let me turn briefly to the other amendments that hon. Members have tabled. Amendment No. 684 would be unworkable. As I have said, audit companies provide a whole host of services for their clients, such as tax advice, IT systems consultancy, internal audit, due diligence work and regulatory filing work. The restriction suggested under amendment No. 684 would harm not only the businesses that clearly value the additional services that they engage audit companies to provide, but audit businesses themselves.
	Amendment No. 686 proposes to limit auditors to serving a maximum of five years. Again, I would be concerned that the amendment would lead to added costs for companies and auditors because they would spend too much time on costly tender processes. New auditors have to take time to get to know client operations and doing that regularly would perpetually add unnecessary costs, prevent auditors from carrying out efficient audits on behalf of their clients and, dare I say, lead to the risk that auditors would be less able to spot that one anomaly that represented a major problem because they had not been involved with the company for as long as they ordinarily would have been. For small, medium-sized and large companies alike, that would add not only cost, but risk.
	Amendment No. 759 would be unworkable and unfair. It would devalue the accounts of companies not involved in any dispute unnecessarily. It would also have an impact on large accounting firms with offices throughout the world. The corporate structure of such a body might be that a large accounting firm in Europe was merged with another firm in Asia. In such circumstances, it might well be impossible to say whether a regulatory action taken in one continent should be included in the report for an office not merged in the other continent. It would be difficult to make the amendment stick.
	We are broadly happy with the Government amendments. Although we have already heard several interventions, I look forward to hearing hon. Members' contributions to the debate and, of course, the Minister's response to the issues that I have raised.

David Howarth: I think that the hon. Lady is confusing the liability rule and the test in the Bill—they are quite different.
	It is crucial to bear it in mind that the circumstances under which auditors can be sued in tort by third-party victims of negligent auditing are extraordinarily limited. The fundamental problem is the form of loss. Pure economic loss, as it is known in law, can be sued for only when the auditor has assumed responsibility to the victim of the particular negligent act. That usually means that no liability is found because the court thinks that the primary responsibility of the auditor is to the company, not to any third-party victims. The number of cases in which auditors have been found liable of negligence to third parties is very small. There will be little pressure—or less than there is now—on auditors from civil liabilities across tort and contract after the Bill has been passed. That is the context of the introduction of the new crime to try to rebalance the situation.
	As we have heard, problems can be caused by audits that go wrong—the Enron and Maxwell cases have been raised. We must thus ask what form the new crime should take. The choice is between a knowing and reckless crime, and a dishonest and fraudulent crime. The difference between the two is not that which the hon. Lady described because she fundamentally misunderstands the notion of recklessness. In one crime, the most important thing is the consequences for other people and the defendant's state of knowledge about those consequences, while causing gain or loss is crucial for the other crime.
	Given the circumstances in which problems arise in audit cases, it is not especially relevant to worry about whether auditors are dishonest in the sense of wanting to gain for themselves from a situation. The important point is the consequences for other people and whether an auditor unreasonably—subjectively unreasonably— took an unreasonable risk. Given the balance of the measures in the Bill and the fact that pressure on auditors is being reduced in some respects—the civil liability pressure on them is quite low anyway—the form of the crime that has been chosen is acceptable, especially given what the Minister has said on many occasions about the Government's view of the meaning of the word "recklessly". I will resist the Conservative amendments.

Austin Mitchell: It is certainly true that the main problems are caused by the big four. Their failures and their practices act as a slur on the entire accountancy profession and audit. However, the Government's aim, and ours, is to achieve proper, effective audit. Audit is valuable, important and required by law, and it might require some increase in the costs of audit to make it as effective as it should be. That is a price that we should be prepared to pay for good audits, but my worry is that the big four do not provide a good audit because they are involved in a collusive relationship with companies. They are selling services to them and using audit as a foot in the door for the sale of other services. That is the import of our amendments Nos. 684, 686 and 759, to which I shall speak briefly.
	The sale of other services creates a collusive arrangement. The audit firms derive 75 per cent. of their profits from the sale of other services. I cite the case of the RAC audits. PriceWaterhouseCoopers undercut the incumbent auditor, Stoy Hayward, by50 per cent. to get the RAC audit. Stoy Hayward's senior partner accused PriceWaterhouseCoopers of undercutting it to secure an appointment that might enable it to introduce higher price consultancy services to the RAC. That is exactly what happens.
	Such firms cut the price of audit, which means cutting its effectiveness and must mean increased pressure on the auditors, in order to get their foot in the door and use that as a market stall from which to sell other services. That brings them into a collusive relationship with the managing director, chief executive and senior figures in the company, because they are more lenient about the audit, about possible failures and about arrangements made in the audit that may raise eyebrows and be slightly dodgy, in order to maintain the good relationship and sell other services.
	Following the failure of the Versailles Group in 2004, Nunn Hayward was fined for failures as auditors. It was making too much money from the sale of other services and the group was too important a client to be as stringent on the audit as it should have been. The big audit houses are prepared to restrict themselves in the sale of other services when they sell audit to local authorities. They agreed not to sell other consultancy services to get that market. If they can do it inthe public sector market, why can they not do it in the private sector market? It will eventually bring downthe price of other services because firms will get auditors bidding to provide other services, rather than entering into a collusive relationship with one auditor, which is a serious danger.
	The US Government have been active in restricting the practice. The Sarbanes-Oxley Act placed restrictions on the sale of other services, which I am grateful to see we have followed in this country. Other restrictions are on their way and we should follow them as well. A collusive relationship is dangerous to the effectiveness, independence and accuracy of the audit. If the price of the audit is cut, that must cause pressure. The firm must be using untrained staff, cutting corners and not reporting things that should be reported, just to get the audit through at a certain price. We should ban the practice of selling other services.
	Amendment No. 686 provides for rotation—a maximum of five years' tenure as an auditor. The Government and the audit profession say that partners are already rotated, but that is not good enough. We must provide for auditors to be changed. It is necessary for a new pair of eyes to look at the arrangement, scan the papers of the previous auditor and take a view. Longevity of auditors means collusion. Longevity of auditors means a comfy relationship and the kind of situation that developed in the Maxwell pensions case.
	I quote from the Department of Trade and Industry report on Coopers and Lybrand's performance. The DTI report stated that the auditing firm
	"consistently agreed accounting treatments of transactions that served the interest of RM"
	—Robert Maxwell—
	" and not those of the trustees or the beneficiaries of the pension scheme".
	Collusion—that is what it is about. We end that with rotation of auditors.
	Rotation of partners is not the same and is not good. Enhancing the independence of auditors requires a new auditor. How likely is it that partner B, on taking over from partner A, will say, "Scandalous practices! We can't to this. We can't do that. We must change that"? It is not going to happen, is it? If the auditors are partners in the same firm they are unlikely to abuse each other or check each other's performance closely. Most of the audit is, in fact, done by teams lower down whose turnover is rather rapid, so even a new partner does not produce the continuity of contact and skill that is claimed. We want rotation of auditors on the grounds that longevity leads to collusion, carelessness and the kind of situation that developed in the Maxwell case. The research indicates that that is a failure.
	Amendment No. 759, tabled by my hon. Friendthe Member for Newcastle upon Tyne, Central(Jim Cousins) and me, seemed to scandalise thehon. Member for Putney by calling for the auditor's report to
	"be accompanied by a statement stating the regulatory action, if any, taken against the firm or any member of the audit team during the preceding five years, together with the outcomes."
	Why not? Why should we not know the reputation of such firms and what action has been taken against them? Why should we not be able to judge the quality of their work from what they have done in previous cases where regulators have taken action against them? This should be public information and it should be available so that we can understand the judgment of the auditor in the light of the performance of that firm and the regulatory action taken against the firm.

Justine Greening: I understand why the hon. Gentleman is setting out this argument, but does he really think that it is an appropriate one in respect of, for example, only one audit in one office in one partof the world? Does he really think that it is a proportionate response, in respect of every single company in every other part of the world that might be audited by teams and offices that have never come into contact with the team that audited that office and that might or might not have had successful regulatory action against it, for every single audit report to include that point? If that means that some businesses might have to have a fresh audit, or even go out of business because investors simply say that they are unwilling to use their accounts any longer, does he really think that that is proportionate response?

Austin Mitchell: That is a fairly far-fetched picture. It is ridiculous to suggest that, because auditors report that action was taken against them in one jurisdiction, clients will flee from the firm that is being audited.
	However, on the hon. Lady's basic point, I simply answer that the international composition that she talks about applies primarily to the big four, whichare multinationals. They market themselves as multinationals and as having a common reputation: "We are PriceWatersCooperhouse"—or whatever it is called. I forget whether it is PWC, which sounds fairly obscene to my ears, or PCW. I think it must be PWC. It markets itself as a multinational team, maintaining common standards and providing services on an international basis. If it does that, it is answerable in respect of its offices in other jurisdictions, and we should know what has happened to it in other jurisdictions.
	An astounding number of cases are relevant to my point. For instance, in the United States of America in 1995, Ernst and Young gave undertakings to
	"comply with standards and guidelines issued by the...SEC...and the accounting profession regarding the independence of public accountants".
	But when a case came up about it not having done that, the judge said that
	"the evidence shows that EY has an utter disdain forthe Commission's rules and regulations on auditor independence...EY committed repeated violations of the auditor independence standards by behaviour that was reckless, highly unreasonable and negligent."
	That is what the judge said about Ernst and Young, which markets itself as a multinational providing services all over the world.
	We are obliged to publish performance and league tables for every other kind of organisation—such as schools—so why should we not have similar information on the firms that are auditing the accounts of public companies and putting their reputations on the line? Those firms do 99 per cent. of the audits of the FTSE 100 companies.
	All our proposals in amendments Nos. 684, 686 and 759 are important, because we do not accept that there is any threat to those big multinationals and their behaviour. Their reckless pursuit of profit endangers the reputation of sound, efficient, effective, respectable and reputable accountants and auditors, which are smaller and are not going in for the same kind of behaviour as the big four.

Michael Weir: I did not intend to speak on this matter, but I have been moved to do so by the comments of the hon. Member for Putney (Justine Greening). She seemed very concerned about auditors, but I have a concern for those who rely on the audit report. It is not only the company that relies on that report: an audit report in a company's accounts will be important to those who are thinking of investing in the company and those who have an interest in it—not least pensioners in the company. The hon. Member for Great Grimsby (Mr. Mitchell) highlighted the Maxwell situation, and the disasters that followed from that.
	The hon. Member for Cambridge (David Howarth) talked about civil negligence against auditors. I have been racking my brains, but I cannot think of any major cases where anyone successfully sued an auditor in such circumstances, although I think that there was an attempt in the Equitable Life case that failed. If an audit goes wrong, that can lead to very serious circumstances.
	What is proposed will not put an undue burden on auditors. The phrase we are talking about is "knowingly or recklessly". I am not an auditor: I was a fairly lowly solicitor before I entered this House. But in law there is a clear and well-established difference between carelessness and recklessness. Even in areas such as road traffic, we talk about careless driving and reckless driving. Recklessness is a very high burden for the prosecution to prove. I accept what the Minister said: the vast majority of auditors are honest, hard-working and do a good job. They have little to fear. The very small minority that for whatever reason—being too close to the company or for their own reasons—do not do the job to anything like the standard of a reasonable auditor are the only people who would have anything to fear. To add "dishonestly or fraudulently" would make it almost impossible for anyone to prosecute successfully. As the hon. Member for Cambridge said, it would have to proven that the auditor had in some way benefited from the fraudulent activity, which would be almost impossible to do.
	This is a sensible move. It means that auditors will have to think about the impact of an audit report outwith the company and adhere to proper standards. If they do not adhere to those standards, to the extent that it is reckless, it is right that there should be the option of a prosecution against them.

Vera Baird: I shall begin by discussing Opposition amendments Nos. 439 and 440. I will then turn to the three amendments tabled by my hon. Friends, and to the six Government amendments that make up the balance of this group.
	This new offence has been debated extensively—hyperbole is a tool that is frequently used, but "extensively" is probably an understatement—and I do not suggest for one minute that the hon. Member for Putney (Justine Greening) is trying to defend the bad auditor. Rather, she is considering the possible impact on the good and honest auditor, and I accept that it is right that she do so. But frankly, the dismal picture that she paints is based on the misunderstanding that we are criminalising negligence by auditors. I agree with her entirely that to do so would be counterproductive, but that is not what we are doing: the Bill does not criminalise negligence. Recklessness and negligence are well-established legal concepts, and they are very different. I explained this at tedious length in Committee, and most members of it seemed satisfied with my explanation. I am grateful to the hon. Member for Cambridge (David Howarth), who indicated that I satisfied him on that point. But as the distinction is so central, let me explain its elements one more time.
	To prove that someone has behaved recklessly, it is necessary to show that the auditor was aware that an action, or a failure to act—the latter is probably much more likely—carried risks; that they knew that the risks were not reasonable ones to take; and that despite knowing this, they went ahead anyway. I did not set the position out in Committee in quite that way; I think that I quoted pretty much the sentence structure used in the House of Lords case of Crown  v. G, which dealt with the question of whether recklessness was a subjective or an objective test. The Lords made it very clear that the test is exactly as I have just set out, so I hope that the hon. Member for Putney will at last be satisfied that we have been very careful in casting this offence, and that it will not have the consequences that she fears.
	The hon. Lady also said that it might not be clear in some circumstances which team member behaved "knowingly or recklessly". If there is no evidence against a particular team member, there will be no prosecution. The offence deals with cases in which there is sufficient evidence, and absolutely nothing in the clause would allow all team members to be prosecuted in the hope that one could be caught. The provision could be used only in respect of a person against whom there was evidence that they had been in the state of mind that I have described a number of times. That is a very long way from negligence.
	My noble Friend Lord Sainsbury went further. He has been faintly criticised in that regard, but he was trying to be reassuring when he said that the guidance to be issued under clauses 522 and 523 would say that for a prosecution to be brought under the new offence, there should be specific evidence of recklessness, and that one should not generally rely on an inference of recklessness from hindsight, even where such hindsight showed a judgment to have been so wrong that it was not credible that the auditor did not know the risk that they were running. We intend that, as a further protection, the guidance will make it clear to prosecutors that that should be the position.
	Let me reassure my hon. Friend the Member for Newcastle upon Tyne, Central (Jim Cousins) that this provision will be used, if necessary. It is one of a portfolio of offences, and it fills a gap. I have it on the authority of no less a person than the Solicitor-General that the insider dealing provisions led to many prosecutions and to at least one conviction while they were on the statute book.

Vera Baird: Thank you, Mr. Deputy Speaker. I do not think that I could cope even if I did try to pursue it.
	The Government believe that it is better for businesses and investors in the UK to use the ways set out in the Bill to guarantee or safeguard auditors' independence, and that the approach adopted is more compatible with the culture that we are used to than would be a pursuit of the course taken by the US, with its Sarbanes-Oxley rules.
	Similarly, we do not agree with the proposal that regulatory action against an audit firm or an individual auditor should be disclosed in every audit report with which they are involved. If an auditor, whether a firm or individual, is found guilty of a disciplinary offence by the professional body or by the AIDB, that is publicly available information to which audit committees and shareholders can have ready access. If auditors are investigated and cleared of a professional shortcoming, it would be unreasonable and wrong to require them to disclose that in reports.
	In summary, I sympathise powerfully with the desire on the part of my hon. Friends the Members for Newcastle upon Tyne, Central and for Great Grimsby to improve the independence and accountability of auditors, but I believe that we have made real progress in these areas in the past few years and that the extra bits of regulation that they propose would be counter-productive.
	Finally, the six Government amendments in this group are minor but worthwhile technical improvements. Amendment No. 213 removes a reference to a type of fine that is inappropriate in relation to conviction on indictment. AmendmentNo. 261 provides a definition for a "supervisory body" for the purposes of clause 539. Amendments Nos. 447 to 449 clarify that, when rights are available to a specified percentage of shareholders, someone who holds shares on behalf of more than one investor can choose to deploy the part of his overall holding appropriate to those investors who wish him to do so. Amendment No. 519 updates the definition of "bank" in clause 1174 so that it now refers to the new banking consolidation directive published in June 2006.

Madam Deputy Speaker: With thisit will be convenient to discuss the following amendments: No. 751, in page 264, line 36, clause 546, leave out from 'proceedings)' to end of line 37.
	No. 752, in page 265, line 12, leave out clauses 548to 552.
	No. 763, in page 265, line 33, clause 549, at end insert ', and
	(c) shall not specify a sum of money as a cap or absolute upper limit on the total liability.'.
	Government amendment No. 648.
	No. 803, in page 266, line 41, clause 551, leave out 'Part' and insert 'Act'.
	No. 802, in page 267, line 14, clause 552, at end insert—
	'(1A) The regulations must require that all such agreements must be filed at Companies House within 21 days of the date of agreement together with a copy of the correspondence relating to the agreement between the company, its advisers, auditors and their advisers.'.

Jim Cousins: In our last debate, when my hon. Friend the Member for Great Grimsby (Mr. Mitchell) and I tried to draw the House's attention to the possibility of market regulation in dealing with our new overmighty subjects—the big four accountancy firms—it was reasonably clearly established that we can await rescue from the United States in due course. In this debate, we will consider what the legal situation is as regards these matters. We are in the hands of a powerful array of impressive lawyers, although I see that we do not currently have the assistance of the Solicitor-General, who did heroic work in former times.
	We are dealing with a situation in which there was already moral hazard because of the enormous power and influence of a few institutions, the domination that they had over their own markets, and the need to open up those markets to a much wider range of audit and accountancy firms that could seek to challenge them. We now have an attempt to strengthen and embed the privileges and to deepen the moral hazards that such institutions already have. The hon. Member for Cambridge (David Howarth) may put me right, but the Caparo judgment was the first step on the route towards embedding the privileges of these powerful firms.
	In 1997, two further court cases—it is unnecessary to go into detail—limited the liabilities of the big firms even further and established the idea of proportionate liability, which has become part of our courts' practice. Not content with that, in 2000, the Government introduced the concept of limited liability partnerships, which effectively further strengthen and defend the powers of a few large firms to dominate the audit and accountancy market. On that point, I have a great deal of sympathy with the hon. Member for Putney (Justine Greening) when she spoke up for the smaller firms. New entrants to the big end of accountancy will find it extraordinarily difficult, given the market power of a few large firms and their international reach and connections.
	It is extraordinary that the Government seek to add even further limitations on liability and even more protections. I hope that they will clarify how much further they intend to go in regulation. There has already been a cascade of protections, yet the Government propose an additional one.
	The new clause would simply provide that people apart from the members of a company—the Government have already accepted in clause 429 that such people should receive relevant documents from the company—should also receive the information about the limitation of liability agreements so that they are in a position to challenge it. It is a small point and perhaps the Government intend to cover it in regulations. The debate provides an opportunity for my hon. Friends on the Front Bench to clarify that.
	In the general structure of introducing liability limitation agreements, amendment No. 763 would provide at least that no one should specify a figure that represents an absolute cap on liability. That would protect the principle of proportionate liability, which has already become a feature of our common law and hardly needs the further reinforcement of the Government opening up the possibility of a final and absolute cap.
	I ask my hon. Friends on the Front Bench to consider how the big four accountancy firms behavein the public interest when they act through the insolvency procedures in which they become administrators of a company. An extraordinary case was brought against the Bank of England and convulsed it for years because it had to put legal and manpower resources into defending itself. The big four accountancy firms, which brought the case, made a great deal of money through the way in which they work the fee system in insolvency cases, despite the compensation that they may ultimately have to pay the Bank of England.
	It worries me—and should worry hon. Members—that, when those firms act in insolvency cases, they are adept at suing each other, yet they seek ever further and deeper protections against the common world. I hope that my hon. Friends on the Front Bench can clarify their future line of march on the matter. We already have examples in the European Union of attempts to introduce a general system of liability protection, and the Government must set out how they propose to deal with that. Of course, the gaping hole in all these arrangements represented by the very different course being taken by the United States could bring the structure of liability protections that the Government are seeking to introduce crashing to the ground. That, too, is something on which the Government Front Bench ought to express a view.

Justine Greening: I am conscious of the time, so I shall briefly set out the Opposition's view on the new clause and amendments. We broadly support the limited liability agreement clauses and do not therefore support amendments Nos. 751, 752, 763, 802 and 803. The limited liability agreement is not made mandatory by the Bill. It will be a matter for companies and their auditors, an agreement between the audit firm and the business. It might, however, provide a tool for more carefully limiting the risk to auditors in relation to the corporate risk that they can influence and have some responsibility for. It is right that clauses 458 to 552 do not take an over-prescriptive approach. It will clearly be a matter for companies and their auditors to work through the fine details of structuring the agreement, and that process will no doubt be adapted with experience and time.
	New clause 86 provides for a limited liability agreement to be circulated to all parties entitled to receive company accounts. This would result in unnecessary bureaucracy, as any agreement would have to be approved by members through the normal company procedures anyway and at that stage the agreement would be available for scrutiny. Similarly, amendment No. 803 also seems to involve unnecessary bureaucracy.
	Clause 551 provides a reasonableness test against which to judge an agreement. Clause 552 provides that the Secretary of State could introduce regulations that require disclosure of an agreement in the annual accounts or the directors' report. Will the Ministertell the House whether the Government intend to introduce such disclosure regulations and, if so, when she expects them to come into force?

Justine Greening: That is an interesting point. Companies can engage whichever audit firms they choose. If a company felt that its accountant was pressing for a limited liability agreement that was excessively limited, that could result in the audit business being made more competitive. There are clearly only so many firms that are in a position to audit multinational companies, but I do not think that this agreement will change that. If anything, it could open the door to some medium-sized companies, to allow them to compete in relation to the agreement that they put in place.
	It would be helpful if the Minister could providethe background to Government amendment No. 648. When I read the existing clause, I felt that it was adequate as it stood. The Government are proposing a change to ordinary resolutions, and it would be helpful if she could clarify the background to this proposal.

Austin Mitchell: I rise to support the speech made by my hon. Friend the Member for Newcastle upon Tyne, Central (Jim Cousins) and to put the case for the amendments.
	We are trying to enforce liability, particularly against the big firms. The auditor has responsibilities and it is not reasonable that liability should be limited in any way. We are saying that there is a principle here that applies in no other field—that is, when a product, which is what an audit is, fails or is not fit for use, there should be no redress against the producer of that product. If that applied in relation to baked beans or Coca-Cola, consumer protection legislation would be reduced to farce.
	Why should the big four—the species that we are told is in danger of extinction—have protection from their own failures, which, effectively, is what limitation of liability is? This has a long history, and I have been surprised by some of the concessions made by my Government. I was involved in a Companies Bill in the 1980s, under a Conservative Government. The audit firms came to us to say that they were threatened because they had deep pockets, poor creatures—the more money they have, the more threatened they feel.
	Those companies were exposed to law suits against them, most of which came from other members of the big four. The audit arms were being pursued by the insolvency arms, so it was fairly incestuous, as my hon. Friend the Member for Newcastle upon Tyne, Central pointed out. They came quaking in fear and said, "We want our liability limited." How did they want it limiting? They said, "We should be able to set up as limited companies, rather than as partnerships."
	So the Bill was changed as a result of representations from the chartered institute and the big audit firms. They were given the right to set up as limited companies, but they did not use it, because they had moved on to another stage—upping their demands. They produced a demand for limited liability partnerships, but the Conservative Government wisely refused to grant it.
	Those firms then bought legislation in Jersey and promised the Jersey legislature, which is not a paragon of virtue, that they would provide the legislation, which they did. It cost more than a million quid and was written by the big accountancy firms here. The legislation passed through the States of Jersey, but the promised flock of dark-suited immigrants who would come to Jersey to set up accountancy businesses to benefit from limited liability partnership did not arrive. Nobody came.
	Those firms then turned to our Government, who, having told us that there was no time to introduce the independent regulation of accountancy and audit as in the United States, which is the only way forward, decided that there was time to limit liability of partnerships. That came in, over our protests.
	The only concession that we gained came about because the Minister was desperate to go to Norway that particular night. If we had continued to talk here, his journey would have been threatened, so he gave us the concession that the proposal would not come into force immediately and that there would be consideration of the exact effects. We achieved a minor victory, but here we are again.
	The argument is specious. We are, effectively, providing limitation of liability, but the amendments would stop either any such agreement or any form of cap. Those big, secretive firms have never produced evidence that there is a huge threat against them or that huge damages would be awarded against them. Only two cases from the 1960s to the 1980s were cited earlier, as I recall, and in the 1990s the big four auditing firms were spending just 2.6 per cent. of their income to meet liability costs. What I have to spend on insurance—house, car and personal—amounts to far more than2.6 per cent.

Vera Baird: As before with the modest quip made by my hon. Friend the Member for Great Grimsby (Mr. Mitchell) about Iraq, I shall not allow his rhetorical flow, whether it be about dark-suited accountants or escaping early doors to Norway, to move me away from the focus of the amendments. I shall go through them one at a time as speedily as I realistically can.
	I sympathise strongly with the concerns expressed by my hon. Friend the Member for Newcastle upon Tyne, Central (Jim Cousins) and my hon. Friend the Member for Great Grimsby, but I hope to persuade them that we have here an appropriate balance. Their amendments Nos. 751 and 752 would delete the clauses that enable the auditor and the company to agree a limitation to the auditor's liability, so the Bill would just reflect the current position that any attempt to do that is void and unenforceable. Their alternative route is, through new clause 86 and amendment No. 802, to extend the publicity given to liability limitation agreements. New clause 86 would do so by requiring proposals to be sent to shareholders of private companies, who would resolve to waive the need for authorisation, and to debenture holders as well as shareholders of all companies. Amendment No. 802 would require agreements and associated correspondence to be filed at Companies House. Amendment No. 763 would prevent liability limitation agreements being made that specified a monetary limit—a cap, as my hon. Friend the Member for Newcastle upon Tyne, Central put it.
	Amendment No. 802 would modify one of the issues to which a court should have regard in considering whether a liability limitation agreement was fair and reasonable. Instead of looking at the auditor's responsibilities under part 17, which is the audit part, it would look at the auditor's responsibilities under the entire Bill. Let me deal with that one first. The amendment would have no effect because all of the responsibilities owed by the auditor of the company that could give rise to a claim by the company are in part 17.
	Government amendment No. 648 removes subsection 550(4), which specified that members were to authorise a liability limitation agreement by ordinary resolution. The hon. Member for Putney (Justine Greening) asked me to say what the point of that was. It is just that the subsection is unnecessary because that is the effect of saying in clause 550(2) that the authorisation is to be by the company passing a resolution.
	Let me go through how we deal with the points raised. The hon. Member for Cambridge (David Howarth) asked us to give an assurance that third parties were not affected. Yes, but as the hon. Gentleman has observed, third parties will seldom have a claim. However, if creditors can get recourse outside there is nothing in this change that ought to affect their ability to do so. It certainly is not our intention that that should be so.
	The agreements will limit an auditor's liability only if the company agrees to the limitation in the contract and it is authorised by the explicit decision of the shareholders or, in the case of a private company, the shareholders resolve to waive the need for approval. The Government's approach to the request made by my hon. Friend the Member for Newcastle upon Tyne, Central about regulation is that the safeguard is that there must be a shareholder resolution.
	There is, of course, much more to be said. After the event, a court can decide, whatever the agreement was, that the limited amount payable by the auditor is not fair and reasonable and, if necessary, it is open to the court to impose a much higher amount, if that is called for. Those provisions were extensively debated in the other place, where there was widespread cross-party support for the policy approach and useful clarification of the drafting took place.
	To put the point moderately, my hon. Friends have argued—I hope that I do justice to their arguments—that the changes will reduce the incentive on auditors to do a good quality job. Let me reiterate that under the new provisions, auditors will not be able to exclude their liability altogether and it will always be open to the court to decide that the limitation is not fair and not reasonable and to impose a higher amount as it thinks fit. Civil liability, of course, is only one of the external incentives on auditors to do a good professional job. If they fall short, a range of disciplinary procedures are available and, although we do not want to go back there, we have just introduced a new offence for anyone who knowingly or recklessly causes an audit report to be misleading, false or deceptive.
	Amendment No. 763, which prevents companies from agreeing a fixed sum as the limit of their auditors' liability, amounts to the same argument. Any attempt to limit the liability to a specific financial amount will not be effective if the court decides that a larger amount is fair and reasonable and that the capped amount is not. There is also a power in clause 549(2) under which regulations could prevent limitation by fixed monetary amounts if, against our expectations, there proves to be a case for doing so in the light of experience.
	New clause 86 and amendment No. 802 deal with the publicity given to liability limitation agreements. As the provisions are drafted, the company will have to write to its members to receive authorisation, except where members of a private company have decided to waive the need for approval, and the company will have to disclose its agreements under clause 552. The details of disclosure are to be fixed by regulations, on which, to respond to a question posed by the hon. Member for Putney, we will consult.

Vera Baird: Is not that the same question put by the hon. Member for Cambridge, which I have already answered?  [Interruption.] I think that it is, but let me say it again. There are rarely claims for third parties, but if a creditor of some sort—including a depositor— can get recourse outside of the contract to limit liability, there is nothing in the provisions that will prevent them from doing so. They will be in no worse or better a position than they were before the change was introduced.
	The current position is that the requirements for publicity surrounding the entry into an agreement are as I have set out, but new clause 86 would force the company to send the proposal to all those—including private companies that had already decided to waive the need for approval—who receive the company's accounts. It would also include venture holders as well as members. If the company wants to send the publicity to the venture holders, that is absolutely fine, but they are not part of the decision-making process and we see no good reason for forcing companies to send the proposals to them.
	Amendment No. 802 would constrain the regulations on disclosure that include filing the full agreement and all correspondence at Companies House within 21 days. As I have already explained to the hon. Member for Putney, the Department will consult on the best form of disclosure, seeking views on the balance between the need for transparency and the avoidance of unnecessary burdens. I would not like to pre-judge that consultation, but it strikes me that the proposals of my hon. Friend the Member for Newcastle upon Tyne, Central lie towards the extreme wing of the argument. In our view, it is best left to regulation and we should not place such definitive proposals in the Bill.

Jonathan Djanogly: The Government's approach in this group is acceptable to the Opposition, but I would like to put it on the record that, with just over half an hour to go, we have finished dealing with only four of the31 groups to be discussed today. Many of the issues in these groups are being covered for the first time on this Bill. Surely that is yet another indictment of the Government's guillotining of the Bill.

Margaret Hodge: I am sure that the hon. Member for Rutland and Melton knows full well what is involved in this group of new clauses. I will simply say what I said at the beginning: the amendments tabled in the names of Opposition Members are all amendments that we have discussed before and the amendments tabled by the Government relate to the consolidation that was requested by the Conservatives in the House of Lords. We have taken the advice of leading people in the field—particularly the Law Society—and have made sure that what we put into the Bill can standthe test of time. That is a perfectly proper way of proceeding, which was agreed by Opposition Members. To play silly politics just wastes time.

Margaret Hodge: The right hon. Member for Suffolk, Coastal (Mr. Gummer) has been in the Chamber for much of our proceedings and has made a welcome contribution. However, I must tell him that the new clauses in this group, those that we have just discussed and many others are simply a restatement of existing legislation. At the behest of Members ofthe House of Lords, we decided to incorporate the provisions in one place so that it would be easier for businesses—especially small businesses, which are enabled by much of the legislation to act more effectively and efficiently, with less regulation—to ensure that they understood and could cope withthe law.
	The new clauses in this group restate part 15 of the Companies Act 1985 in so far as the provisions apply in relation to part 23 of the Bill. Part 23 enables public companies and members of those companies to ascertain the underlying beneficial owners of shares. The company may apply to the court for an order under clause 803 directing that the shares in question be subject to various restrictions under part 15 of the 1985 Act, which include voiding any transfer of the shares and providing that voting rights are not exercisable in respect of the shares. Those provisions are restated without substantive change in the new clauses.
	Part 15 will remain in the 1985 Act because it also applies to part 14 of that Act, which will remain in force. Nevertheless, we think that it is helpful to make a restatement through the new clauses so that the reader can find all the relevant provisions for part 23 in one place. Again, we have consulted on the new clauses and we are especially grateful to the Law Society for its useful comments.

Vera Baird: The majority of the amendments in this group are drafting amendments and I do not propose to dwell on them at length. If hon. Members have questions about them, I shall do my best to reply. The amendments are all pretty self-evident. They make improvements to the Bill and should cause no contention.
	I should say something about the amendments relating to the provisions on proper delivery, as these introduce changes to the Bill in the interests of clarity and consistency. It is clear from the Bill, as set out in clause 1038(1), what requirements a company must meet in order to have "properly delivered" a document. In the Bill there is some inconsistency as to the implications of failure to comply with these requirements. For example, clause 862(6) as it currently stands makes it clear that when we talk about a company failing to deliver its annual return, what is meant is failure to comply with all the requirements set out in clause 1038(1). If the company does not meet those requirements, it cannot be said to have delivered the document for the purposes of compliance withthe law.
	However, provisions in the Bill in relation to many other documents do not make similar reference to clause 1038, implying that there are, so to speak, two sorts of delivery, a "first class" status of "proper delivery" and a "second class" one of "mere delivery". Such an inconsistency cannot be helpful to anyone and it leaves the status of documents that are "delivered" but not "properly delivered" somewhat uncertain.
	It is important to be clear about what a company does and does not need to do in order to comply with the law when it submits documents. Clarity is provided by amendment No. 742, which makes it clear that in order for a document to be considered as delivered, it must be properly delivered in the terms of clause 1038. That clarity will be helpful to companies, so that they know what they need to do, and to Companies House, which needs to be sure when it can and cannot take action against a company. Introducing a consistent policy across the Bill has some implications for other clauses, which are dealt with by other amendments.

Madam Deputy Speaker: With this it will be convenient to discuss the following:
	Government new clause 67— Court order for holding of meeting.
	Government new clause 68— Statement to be circulated or made available.
	Government new clause 69— Duty of directors and trustees to provide information.
	Government new clause 70— Court sanction for compromise or arrangement.
	Government new clause 71— Powers of court to facilitate reconstruction or amalgamation.
	Government amendments No. 520 to 522
	No. 113, in page 421, line 31 [Clause 901], leave out from 'application' to 'the' in line 32 and insert
	'from the company, a member or a creditor'.
	Government amendment No. 523
	Government amendment No. 524
	Government amendment No. 525
	Government amendment No. 526
	Government amendment No. 527
	Government amendment No. 528
	Government amendment No. 529
	Amendment No. 117, in page 425, line 5, clause 908, leave out '900' and insert '899(1)'.
	Amendment No. 118, line 20, after 'undertaking', insert ','.

Madam Deputy Speaker: With this it will be convenient to discuss the following:
	Government new clause 78— Resolutions to be forwarded to registrar.
	Government new clause 79— Obligations of company with respect to articles etc.
	Government new clause 80— Supplementary provisions where company's constitution altered.
	Government new clause 99— Notice to registrar of existence of restriction on amendment of articles.
	Government new clause 100— Statement of compliance where amendment of articles restricted.
	New clause 89— Unamendable articles—
	'(1) Notwithstanding anything in section 22, a company's articles may provide that specified provisions of the articles may not be amended or repealed—
	(a) except with the unanimous consent of the members, or
	(b) in any circumstances.
	(2) Provision for unamendable articles under this section may only be made in the company's articles on formation.
	(3) Provision for unamendable articles shall count for the purposes of this Chapter as provision for entrenchment.'.
	Government amendments Nos. 688 and 206.
	Amendment No. 790, in page 9, line 13, leave out Clause 22.
	Government amendments Nos. 837 to 841 and 791.
	Amendment No. 378, in page 9, line 31 [Clause 23], leave out subsection (2).
	Government amendment No. 792.
	Amendment No. 379, in page 10, line 7 [Clause 24], at end insert 'by unanimous consent less one vote.'.
	Amendment No. 380, in page 10, line 7 [Clause 24], at end insert
	'by a resolution of at least 90 per cent.'.
	Amendment No. 381, in page 10, line 7 [Clause 24], at end insert
	'by a scheme of arrangement approved by the court.'.
	Government amendments Nos. 689 to 697.
	Amendment No. 4, in page 15, line 23 [Clause 36], at end insert
	'or such longer time as the court allows'.
	Amendment No. 3, in page 15 [Clause 36], leave out lines 26 to 30 and insert—
	'(b) if the order—
	(i) amends the company's articles, or
	(ii) amends a resolution or agreement to which Chapter 3 applies (resolutions and agreements affecting the company's constitution), or
	(iii) gives leave for the company to make any, or any specified, alteration in its articles,'.
	Government amendments Nos. 698 to 702.
	Amendment No. 93, in page 461, line 21 [Clause 963], at end insert—
	'(f) make provision for entrenchment as referred to under section 22.
	(3) The court's order must be embodied in or annexed to every copy of the company's articles issued by the company.'.
	Government amendments Nos. 703 and 704.

James Brokenshire: I will largely confine my comments to amendment No. 790 and clause 22. This must be one of the most bizarre concepts in the Bill. Historically, members have been able to change their articles of association or amend their memorandums if they get 75 per cent. of the votes in a general meeting. The Government seem fixated with the concept of shareholders being able to entrench their rights, so that future members are unable to change the company's constitution. The foremost question is why the Government want that to happen. We have seen no representations asking for the provision, but plenty of criticism. My hon. Friend the Member for Huntingdon (Mr. Djanogly) put that point in Committee, and the Minister replied:
	"Why have a concept of entrenchment? Why go beyond a special resolution?...We have to look at the Companies(Audit, Investigations and Community Enterprises) Act 2004, which introduced new provisions that make it difficult to entrench provisions in articles. There was a demand for usto do so, particularly from social enterprise and community interest companies."—[ Official Report, Standing Committee D,20 June 2006; c. 61.]
	It seems strange that the Government should base the entrenchment provisions on the requirements of the roughly 300 community interest companies in existence. There is neither interest in nor demand for entrenchment from large companies, small family companies, venture capital companies, or from any of the tens of thousands of other companies that exist.
	In Committee, the Minister agreed that CICs would have separate legislation and would not be consolidated. However, if she wants to present arguments for entrenchment in relation to CICs, surely separate legislation is the best place to do that? Amendments Nos. 790, 791 and 792 together would provide for those provisions to be deleted from the Bill. If I am given leave to do so, I should like to press amendment No. 790 to a Division, in order to test the House's opinion on the matter.
	I turn now to amendments Nos. 379 and 380. If the entrenchment clauses have to remain in the Bill, better provision should be made for removing them. I recognise that the Government have gone some way to accepting that through their introduction at an earlier stage of an amendment allowing entrenchment to be reversed by a unanimous vote. That was a step in the right direction. Furthermore, they propose to extend the provision to court orders that counter the entrenchment, and that is another welcome improvement. However, the Opposition believe that there is a need to go further, so amendment No. 379 allows for the fact that public companies always have more than one shareholder and that private companies, before 1989, had to have at least two. Many private companies still do have at least two shareholders, as they never got rid of the spare shareholder after 1989.
	Public holding companies got around the provision by finding an individual—normally one of the directors—who would hold the second share, subject to a declaration of trust. That declaration meant that the director promised to act in accordance with the holding company's wishes. In practice, those declarations were not always made, depending on the efficiency of the company secretary. Sometimes they get lost in the mists of time, and sometimes old forms get thrown away when a director leaves a company. As a result, getting unanimity can often be tough, and that is why we suggest that articles should be removed by unanimous resolution, less one vote.
	Additionally, amendment No. 380 brings back into play a proposal originally put forward by Lord Hodgson. It would reduce to 90 per cent. the level of agreement required for the removal of entrenched articles. That 90 per cent. level would tie in with the amount required to buy out minorities in a takeover, and I also point out that 10 per cent. is the level needed to call a general meeting.
	My main concern about the Government's position in Committee was that if two individuals owned100 per cent. of a company that they set up, they could at the outset put in place whatever provisions they wanted. The Minister came up with a compromise, saying that 100 per cent. of shareholders can endthe entrenchment. That is an improvement, but we maintain that it is hardly most people's idea of shareholder democracy. The Government need to make clear the concept behind their approach, as they have not yet done so.
	We have tabled amendment No. 381 in accordance with the brief from the Institute of Directors in respect of the modernisation of company law. It states:
	"Entrenching provisions need to be approached with care. In commercial companies they could be dangerous, as a company could be held to ransom by a single shareholder holding one share (if he has a genuine grievance, his remedy will normally be to apply to the courts). We think it is essential to make it explicit in the legislation that any entrenching provision (and any entrenched provision) may be a scheme of arrangement approved by the court regardless of absence of unanimity (or other level of approval stipulated in the constitution). We consider that this would reduce the impact of companies happily introducing a requirement for unanimity then living to regret it when the business cannot move on. We also think there should be no encouragement for commercial companies to adopt entrenching provisions. For instance, any model form of constitution for such a company should not include wording for entrenching provisions (even as an optional extra)."
	That is another option that the Government could use to replace their restrictive provisions to reflect the wishes of many small and large companies.
	Turning to amendment No. 378, clause 23 provides for a notice of entrenchment to be filed, but if an entrenchment resolution is passed, surely the resolution filed at Companies House, together with the revised version of the articles filed, should be adequate. I cannot think of any other compliance provisions, so I question the purpose of the extra piece of paper, particularly given our desire to be deregulatory. Furthermore, the measures will increase regulation. The director must ask a lawyer to confirm that the new notice is compliant. Even if it is blatantly the case that it is compliant, doing so is a belt-and-braces safeguard. The Government measure is unnecessary and will lead to trouble, so I urge the Minister to drop it. We should consider how we can improve shareholder democracy, not restrict it with entrenched provisions.
	I note the Minister's comments on the contractual arrangement between companies and their members. I certainly welcome that clarification of the law, given the history of such measures. Unfortunately, time does not allow me to discuss the matter in greater detail, or to talk about Lord Wedderburn and various other learned, legal minds, but we certainly welcome that aspect of the Minister's proposals.

Margaret Hodge: I do not have time to answer the right hon. Gentleman properly, but the issue has been discussed many times—probably about five times. I simply draw his attention to the fact that the proposition before us was not invented by civil servants, but emerged from the company law review. It has been debated and discussed with all stakeholders over a very long period, and on that basis has some credibility. We debated it in Committee. We have one view from the Liberal Democrats and a completely opposite view from the Conservatives, while Labour Members stand where they always do—representing the vast majority of people in this country—
	 It being Four o'clock, Madam Deputy Speaker  put forthwith the Questions necessary for the disposal of business to be concluded at that hour, pursuant to Order [17 October].
	 Question put and agreed to.
	 Clause read a Second time, and added to the Bill.
	 Question, That new clauses 78 to 80, 84, 85, 87, 88A, 92 to 96 and 98 to 100 be brought up, read the First and Second time and added to the Bill,  put andagreed to.
	 Question, That amendments Nos. 470, 471, 823, 472, 764, 718, 765, 719, 720, 473, 721, 766, 722, 688 and 206 be made,  put and agreed to.
	 Amendment proposed: No. 790, in page 9, line 13, leave out clause 22.— [James Brokenshire.]

Margaret Hodge: This has been a very good learning process. I am delighted that we have now reached the Third Reading of the Bill.
	I am proud to have been part of what hasbeen the biggest reform ever, I think, of company law. The Government's goal has been to increase competitiveness. We are committed to ensuring that the legal and regulatory framework within which business operates promotes enterprise, growth and the right conditions for investment and employment. We all recognise that we operate in an increasingly global marketplace. Our company law framework must enable business to flourish in the 21st century, where business and investment decisions are determined more and more by our global environment, and cross-border activity is commonplace.
	Since this Government have been in office, we have been extremely successful in securing growth in British enterprise and growth in British jobs. New incorporations have risen by over 60 per cent. since 1997. Companies House adds 120 companies to its register every working hour. Indeed, the customer record for the fastest incorporation at Companies House is less than five minutes. The number of EU firms incorporating in the UK has more than quadrupled since 1997, and Britain is increasingly seen as the location of choice for international companies for manufacturing, research and development, marketing and European headquarters.
	The Bill will make the UK an even more attractive place in which to invest and do business. It is a real step forward in the reform and modernisation of company law, so that the UK remains a leader in the world of business and finance. As I have learned, much of our company law dated back to Victorian times. Over the past 50 years, the law has undergone reform, but in a piecemeal fashion, leading to a body of law that is increasingly complex and inaccessible, especially for smaller businesses. The framework established by that law needed to be updated. It needed in-depth and considered reform. That is what we have delivered.
	This Bill will bring many and important benefits to British business. Company law is a crucial part of the legal framework that promotes enterprise and growth. The Bill ensures that we can continue to grow our economy, providing the right conditions for investment, employment and modernisation. Our aim has been to maintain the UK's position as a prime place to incorporate a business. I am confident that we have succeeded.
	The Bill has also rightly attracted the attention of a much wider constituency. The Bill is significant for the culture it seeks to promote on corporate accountability. Our company law needed to reflect the new climate of corporate social responsibility. The importance of the issue to companies and citizens was reflected in the thousands of representations to MPs, and in the time that we spent on Report and before that debating the relevant clauses. In my view, we have taken some historic steps forward, which will help us to achieve long-term sustainability for businesses and for the communities and societies within which they operate.
	Let me reiterate the Bill's key themes. The first is to enhance shareholder engagement and create a long-term investment culture. The second is to ensure better regulation and a "Think small first" approach. The third is to make it easier to set up and a run a company. The fourth is to provide flexibility for the future.
	The Bill updates and simplifies the regulatory framework to reduce cost and increase flexibility for companies. The "Think small first" approach to regulation is at its heart, which makes it easier to set up and to run a company. It makes life easier for companies and their advisers by bringing company law together in one place, and by restating the law in clear, modern language. It is now a complete code of company legislation. It incorporates all the provisions in existing companies legislation except those on investigations, which go wider than companies, and the self-contained provisions on community enterprise companies.
	I should make it clear that in introducing the restated clauses, we have not made changes to the law except to the extent necessary to ensure consistency with other parts of the Bill, and in some cases to ensure that the provisions comply with our European obligations. A complete code is what users want, and I am pleased that we have been able to deliver it.
	At the heart of the Bill are the provisions on directors and shareholders. We have provided a statutory statement of directors' general duties, which will make what is expected of directors much clearer. It recognises that to achieve sustainable success for the benefit of shareholders, directors should have regard to wider factors than short-term profit. Many businesses have long seen the link between long-term success and responsible behaviour, but we want all directors and all companies to behave in that way. Prosperity and responsibility go hand in hand.
	We have carried forward the long-established principle of enabling shareholders rather than the state to be the primary regulators of corporate behaviour. Provisions to strengthen the involvement of shareholders and thus to promote a long-term investment culture are key parts of the Bill. There will be fuller reporting, and quoted companies will need to cover future challenges and opportunities as well as past performance. Investors holding shares indirectly will now be able to play a full part.
	This is undeniably a long Bill, but it is also comprehensive. Now is not the time for me to go through all the ways in which it modernises and simplifies the law. Many of the changes are small, taken individually, but taken together they add up to a thorough-going reform that will help UK business to succeed in the future.
	On Report, the hon. Member for Huntingdon (Mr. Djanogly) asked me for an indication of when the Bill's provisions would commence. Because of time pressures, I did not respond then. I can say now that some of the provisions, such as those on takeovers and the transparency directive, need to be in place very soon because of our European obligations. As for the rest, there are strong interconnections. We have already received detailed views from interested parties on the factors that we should take into account in deciding on the timetable. I want to ensure that we implement the Bill in the way that will be best for business. We will announce our timetable for implementation before it completes its passage.
	Let me say something about the way in which the Bill has been developed. I take particular pride in the inclusive and collaborative approach that we have adopted, and in the consistent and informed engagement of so many outside parties. I pay tribute to those who undertook the Company Law Review, which was the inspiration for the reform process. The review brought together leading experts in the field, and many interested parties became involved in the deliberations both during the review and subsequently. I thank the many businesses and other organisations—including professional associations, trade unions and special interest groups—who worked with us so constructively in developing the legislation over time. I particularly thank the company law committee of the Law Society, which worked painstakingly to scrutinise the proposals at every stage. That includes the re-statement clauses added during the Commons passage. I believe that it is in large part thanks to that collaborative approach that the resulting legislation has generally been warmly welcomed.
	I should also like to pay tribute to the parliamentary draftsman and his team. The clarity and simplicity of his drafting style has been much commented on and will, I know, be appreciated by generations to come who have to use our company law. I thank colleagues from all parties for their contributions to our interesting and constructive debates. I particularly want to thank those hon. Members who served so expertly on Standing Committee D and the Chairmen of that Committee for the thorough and detailed scrutiny of the Bill which took place there. My particular thanks go to my hon. Friends on the Labour Back Benches, who had to sit patiently through many hours and many sittings of Committee proceedings. They are not here today, but I will mention their names.
	I thank my hon. Friend the Member for Newcastle upon Tyne, Central (Jim Cousins), who was a member of the Committee until he was taken ill, but who has helped considerably on Report. He was replaced by my hon. Friend the Member for Broxtowe (Dr. Palmer). I also thank my hon. Friends the Members for Liverpool, Riverside (Mrs. Ellman), for Barnsley, East and Mexborough (Jeff Ennis) and for Newcastle-under-Lyme (Paul Farrelly). My hon. Friend the Member for Bedford (Patrick Hall) has played a constructive and active role, and I thank my hon. Friends the Members for Falkirk (Mr. Joyce) and for Bradford, West (Mr. Singh). My hon. Friend the Member for Burnley (Kitty Ussher) has been extremely helpful to me, and I also thank my right hon. Friend the Member for Leicester, East (Keith Vaz).
	I thank Opposition Members who sat through the proceedings on the Bill. I hope that they accept that we listened constructively to the propositions that they made. I always tried where I could to incorporate them in the legislation. I pay particular thanks to my ministerial colleagues—the Solicitor-General and the Under-Secretary of State for Constitutional Affairs, my hon. Friend the Member for Redcar (Vera Baird)—for their help and expertise in taking the Bill through and keeping me sane by supporting me in what was a massive task.
	I pay tribute to our Whip, my hon. Friend the Member for Birmingham, Hall Green (Steve McCabe), who also had challenges facing him during the proceedings on the Bill and who worked extremely hard to ensure the proper passage of the Bill. Finally, I thank the officials and reporters of the House, who have earned particular gratitude for coping with the challenges of dealing with legislation of this size and complexity and the many officials in my Department and across Government, especially Philip Bovey and Anne Willcocks, for the contribution that they have made in ensuring that we got this historic legislation this far.
	This is a crucial Bill for UK competitiveness. Our company law has served us well in the past. With this Bill, we modernise and strengthen it and ensure that we create a firm platform for national business success. I commend the Bill to the House.

Alan Duncan: Reaching the Third Reading of this Bill has taken a long, long time. Right back in March 1998, the Government launched the company law review, as the Minister has said. There was then a good case for updating company law in this country. It is a case that has grown in the intervening years. Since then, we have had eight years to discuss the issues and two White Papers along the way.
	In another place Lord Hodgson opened the debate in Grand Committee by saying:
	"A journey of a thousand miles begins with a single amendment."—[ Official Report, House of Lords, 30 January 2006; Vol. 678, GC1.]
	It is a view with which I wholeheartedly agree. I should like to return to the issue of the passage of the Bill shortly, but first I thank my colleagues in this House and another place who have worked extremely hard in the past year to improve the Bill. In another place, Lord Hodgson, Baroness Noakes and Lord Freeman made substantial improvements to it. In this House,my hon. Friend the Member for Huntingdon (Mr. Djanogly), who apologises that he has not been able to stay for this Third Reading debate, has done a marvellous job in keeping on top of the Bill's more than 1,200 clauses and an even greater number of amendments.
	I should also like to thank our DTI Whip, my hon. Friend the Member for Reigate (Mr. Blunt), who has been utterly determined and masterly throughout this long process. We have also had the welcome assistance on the Front Bench of my hon. Friends the Members for Hornchurch (James Brokenshire) and for Putney (Justine Greening), who have both worked so hard in Committee and on the Floor of the House. They have proved themselves to be professional and effective Members of Parliament.
	Conservative Members support most of the Bill and the loudest dissent, it has to be said, has come from Labour Back Benchers. There remain only a small number of issues on which we disagree with the Government. That is due in good part to the Government having conceded our point on a raft of concerns—a point to which I shall return later in acknowledgement of what the Minister said a few moments ago. In wrapping up this long process, I should like to spend a little time dealing with some of the most important issues.
	The question of directors' duties has proved one of the most contentious as the Bill has proceeded and I would like to make our position clear and put a few points on the record. First, Conservatives agree with the ethos behind enlightened shareholder value, even though the Government have been unable—or perhaps unwilling—to provide a simple interpretation of what it actually means. We tabled a number of amendments to what will become section 173 because we did not believe that the clause as drafted represented the best statement of the enlightened shareholder value principle.
	Although the wording has, to be fair, improved, the central problem with the clause remains. It is broad, vague and unclear and is capable of being interpreted in many different ways. That may be something that Ministers have used to their advantage during the Bill's passage. When addressing business audiences, Ministers have claimed that the clause is merely a restatement of the status quo, but when talking to campaign groups such as the Corporate Responsibility Coalition, they have emphasised how much the new approach will change things. The lack of certainty goes to the heart of the issue, as the House should aim to pass laws that are clear about what it is they are meant to do. We should reject laws that are worded in such a way as to make recourse to interpretation by the courts inevitable.
	Let me make another point clear. Our amendments have not been designed to make it easier for directors to ignore concerns about employee issues, social issues or the environment. My hon. Friends will know that we are calling on the Government to introduce a climate change Bill in the next Session. Such a Bill would contain concrete provisions on companies and their environmental impact. That is the sort of regulation that we Conservatives believe would work effectively. By contrast, the Government perhaps want to fob us off with the vague provisions of clause 173.
	It was Lord Eldon, then Lord Chancellor, who set down in 1817 one of the fundamental tenets of company law—that the courts should not
	"be required on each Occasion to take the Management of every Playhouse and Brewhouse in the Kingdom."
	Since that time, the judiciary has been rightly reluctant to interfere with the internal management of companies. Lying behind Lord Eldon's phrase is the principle that, so long as the directors of a company act in good faith, decisions will not be revisited by courts with the benefit of hindsight. I am afraid that the Government's phrasing may well end up undermining that commendable principle.
	The second contentious issue relates to clause 22, which deals with entrenched provisions in a company's articles. There are potentially two logically consistent positions that one can hold on this matter. The first was put forward by the hon. Member for Cambridge (David Howarth), who said that full and irreversible entrenchment was desirable and that companies should have the right to create articles that can then never be changed. I disagree with the hon. Gentleman for reasons that I shall come on to in a few moments, but it is a logically consistent position to hold. The second possible approach is one of flexibility, reflecting the fact that businesses need to be able to respond to a changing marketplace or to changing purposes as a company's scope and activities change.
	The changed circumstances that we will see in the future will mean that companies will have to change, but the people entrenching provisions in today's companies are not able to foresee the changes that lie ahead. We should not allow the present shareholders to impose absolutely on future shareholders. Such fossilisation may entrench principles that are inferior and unsuitable for future circumstances. That is our position and it, too, is logically consistent.
	The Government's position, on the other hand, is not logically consistent. They have argued, and continue to argue, that there may be value in allowing companies to entrench articles, but now they say that it should not be irreversible. In Committee, the Minister said that they do not want companies' constitutions set in stone, but they have allowed the unreasonable requirement of unanimity to change provisions. What is really unacceptable is that the Government's programming did not even give time for that issue to be debated at all on Report.
	Thirdly, we are concerned about directors' conflicts of interest and that the tightening of what constitutes a conflict and, more important, how it is dealt with by a board will lead to experienced directors being unwilling to share their experience on other boards. Our fourth area of concern relates to the new derivative claims regime, which by broadening the scope for shareholder-inspired actions against directors could lead us to the US have-a-go litigation culture, with the associated risks of higher directors and officers insurance premiums and fewer people wishing to serve as a director. We must look at the implications of Sarbanes-Oxley, which are stifling small and medium-sized listed companies in the United States, and be sure not to repeat the same mistakes in the UK.
	Our fifth concern is the requirement to disclose institutional voting. That provision is one of a large number of clauses introduced by the Government at the end of Committee. No time was given to debate it in Committee, or to give it proper scrutiny. We support institutional investors voluntarily declaring how they voted with the shares they own. However, we feel that making it compulsory could be counter-productive. If such declarations mean extra costs, extra paperwork and intimidation from campaign groups, institutional shareholders are more likely not to bother voting at all with the shares they hold, which would not be good news for shareholder democracy.
	Our sixth area of contention—and Members will be relieved to hear, the last—concerns the business review. Here, too, the Government and others have misrepresented our position. We believe in and support the business review, and for the avoidance of doubt I shall explain why. Clause 423 refers to businesses reporting annually on
	"trends and factors likely to affect the future development, performance and position of the company's business".
	That is eminently sensible. Investors will be pleased to see the provision enacted and will be able to make better investment decisions as a result of the extra information made available to them. The next paragraph in the clause requires reporting on environmental and social matters, along with issues relating to the company's employees, and is also covered by the phrase:
	"to the extent necessary for an understanding of the development, performance or position of the company's business".
	Again, that seems perfectly sensible from the point of view of investors and not over-burdensome from the point of view of quoted companies. Indeed, according to the Association of British Insurers all FTSE 100 companies were reporting at some level on social, ethical and environmental issues as long ago as 2003. British companies are leading the way.
	What is happening with voluntary reporting is good news. The business review will improve things by making companies that currently report nothing report something. Even greater levels of corporate disclosure will be commonplace in the next few years, through the voluntary actions of companies that increasingly recognise—as the Minister said earlier—the business benefits of openness and transparency.
	Companies I talk to broadly welcome the business review, as it gives them flexibility to refer to their social and environmental actions in their own way and in a way that is relevant to their business. However, there is just one small spanner in the works of the business review: the Government's decision to table last Monday a new amendment on the subject. It is not as though they have not already tinkered enough with corporate reporting provisions. First, they consulted on an operating and financial review and then regulated for it. Then, last November, the Chancellor scrapped it without telling the Department of Trade and Industry. Nine weeks later, he U-turned again and agreed to consult on it again. Finally, in March, the Government formally scrapped it.
	Let us be clear: indecision on that issue helps no one and achieves nothing. Many British companies already lead the world in corporate social responsibility. They want to act decently and to be seen to be doing the right thing; yet, without consultation and without so much as a courtesy phone call, the Government slipped in amendment No. 821 at the last possible moment. The effect of the amendment will be significant and wide-ranging. Again, the proposed wording is broad, vague and unclear. Of course, the Government's programme motion for Report ensured that Members did not even get a chance to debate it.

Alan Duncan: My right hon. Friend is absolutely right. The Government's conduct made the grand old Duke of York look like a hero. It is unacceptable for the Government to make such a change at this stage and without consultation. As he suggested, the provision is clearly designed by Ministers to keep a few of their own Back Benchers quiet. That is not the right way to make good law. Ministers should know that without successful and thriving businesses in this country, there would be no jobs, no tax receipts and therefore no money for the critical public services that we all want to see. They should know that creating vague, vexatious and burdensome regulation for political reasons is bad for the country and the reputation of politicians.
	I said on Second Reading that we broadly support the Bill and that it is pleasing that we have to disagree with only a handful of its many clauses. Despite the areas that I have just laid out, where I believe that the Government have got things wrong, I still believe what I said earlier. In fact, I think that we now agree on more areas of the Bill, because the Government, to be fair, have listened to the reasoned arguments of Conservative Members on a number of key issues. I welcome the fact—and express appropriate gratitude—that Ministers have recognised that in a Bill this large, it was not possible to get everything right the first time. By the process of listening to suggestions and arguments from both sides of the House, the Bill has been much improved. I am grateful to the Government for accepting some of our arguments and not being obdurate on everything just because we are the Opposition. We are, after all, here to make good law for the one country that we all represent.
	I am not claiming that Conservatives have a monopoly on wisdom in the House, but on this matter, just as on synthetic phonics, tax in relation to soldiers in combat, integration in faith schools and many other issues, the Government have come round to our way of thinking. They accepted our arguments on the value of company secretaries. They listened to our calls for consolidation of the Bill with the Companies Act 1985. The Conservatives even changed the name of the Bill. The Solicitor-General was good enough to vote with us on that and I am grateful for that support.
	The Government saw the error of their ways on what was the original part 31, which created a monstrous new kind of super statutory instrument. They have come to agree in part with my hon. Friend the Member for Huntingdon on the issue of the home addresses of directors and, in part, with our position on access to the register of members. Following arguments from my colleagues in another place, nominee shareholders will have a greater opportunity to participate actively in the companies that they own. Our arguments to reduce the numbers of forms have been accepted, as well as our arguments on a host of technical issues, for which practitioners have been grateful. Small and charitable companies will benefit from our work on audit rules for such companies.
	I express our profound gratitude to Ministers for the positive way in which they have dealt with those improvements to the Bill. I add my special gratitude—echoing the Minister—to Department of Trade and Industry officials, the Clerks of the House and all the Officers of the House for the mammoth undertaking that has probably dominated their lives for the past six months or so. I hope that they have managed to get some sleep in the course of their hard work.
	I will conclude with a few remarks about the progress of the Bill. I understand—no one has questioned this—that this is the biggest Bill in parliamentary history. It had more than 1,260 clauses when it left Committee and more clauses have been added since. We have considered many hundreds of amendments. The Government have tabled more than 600 in the past fortnight. Some of them are what the Minister would have described, if she had just found the word, as consequential amendments—amendments that follow naturally, out of logic, from amendments that have been made earlier. In as much as many of the amendments are consequential, we accept that they do not necessarily need debate—if they are genuinely consequential. However, this has not been a satisfactory way for the House to make law. Hundreds of new clauses—ones that do matter and are not merely consequential—have never been debated at all; some because they were uncontentious, many because of the iniquity of the programme motion, and yet more because they were tabled only at the end of the Committee stage and time was not given on Report to correct that misdemeanour.
	Yesterday, my hon. Friend the Member for Reigate raised a point of order because for reasons that I have outlined, we wished to vote against Government amendment No. 821. Madam Deputy Speaker ruled, quite rightly and understandably, that if we were to vote against those two lines of text, we would be obliged to vote against several pages of perfectly sensible amendments as well. It is a pity that our processes do not allow us to press distinctive amendments to a Division.
	We have kept a tally of what has not been debated. In Committee, 419 Government new clauses were not debated. On Report, 33 out of 52 subject areas that were selected by Mr. Speaker were not debated, along with 177 Government amendments, seven Government new clauses and one Government new schedule. I have been given a useful crib sheet saying that I can add to that 123 Government amendments, two new clauses and two new schedules—and, no doubt, a partridge in a pear tree.
	I hope that the Government will learn from the experience of this Bill. By bringing forward more clearly directed legislation that is better consulted on in advance, and without tabling surprise amendments at the last possible minute, the Government can help to ensure that the House delivers better legislation, and they will thus trouble our courts less with questions of interpretation.
	By and large, the Bill is welcome and good. However, I am certain that we will have to revisit elements of it in the not-too-distant future. Sooner than we would wish, it will be tested in the courts, and subsequent legislation will be required to tidy it up.

David Howarth: Company law is part of the hidden wiring of the economy. Immense problems are caused if it goes wrong, but no one notices if it goes right. The limited liability company was one of the great inventions of the 19th century. In many ways, it was more important than the technological inventions of that century. However, like all inventions and advances, it brings its own problems. The corporate form helps to channel investment into specific areas, but it also brings its inherent problems, which are classically problems for creditors. The corporate form helps new enterprises to get off the ground by separating an enterprise's assets from the personal assets of the entrepreneur, but it also provides a vehicle for the concentration of economic power and a type of organisation in which responsibility is diffuse. The fundamental principle of company law for the past 150 years—I hope that it is maintained in the Bill—has been that people should be allowed to use the tool of the corporate form as they wish, unless there is a public interest that overrides that power.
	We welcome the underlying themes of the Bill, especially the deregulatory and think-small-first themes. However, we remain convinced of the need for regulation in specific areas not only to restrain harmful behaviour, but—this was the theme of our contribution to the debate on the OFR and the business review—to help the creation of new markets and forms of market. However, we fully accept that the Bill is an attempt to strike the same balance that has faced Parliament for 150 years in new economic and social circumstances.
	I shall not go through all the areas of the Bill that the hon. Member for Rutland and Melton (Alan Duncan) mentioned. The Bill is far too long and complex for me even to attempt a summary of pros and cons at this stage, but I shall mention one aspect that he covered: directors' duties. Our view is that the reform contained in clause 173 is a useful development. The Minister called it historic. I am not sure that it is historic, but it is an important advance. It has the effect of protecting directors who wish to follow corporate social and environmental responsibility to a greater degree than fund managers might like. It encourages a responsible attitude towards the environment and social matters, and taking a long-term view.
	There are worries that the clause mandates that approach in a way that would be restrictive for directors and difficult for them to deal with. We do not believe that that is the case. We believe that the reform is well balanced, but there are problems with the directors' duties area of the Bill. The hon. Gentleman mentioned that there was insufficient time to debate certain parts of the Bill. I draw the Government's attention to one aspect of the directors' duties, a chapter which I fear may produce difficulties in the future. I hope that they pay some attention to it.
	I refer to clause 171, which we were due to debate yesterday, but it was in one of the groups that fell. The problem in the clause is that the Government have not fully made up their mind what the relationship is between the duties as they stand in the Bill and the law as it was before the Bill. It should have been possible to be clearer about which aspects of the Bill are reforms and are new, and therefore take precedence, and which areas are consolidations and codifications of existing law, in which case the previous law is highly relevant.
	There might be a political problem for the Government in doing that. The hon. Gentleman mentioned the difficulty of having to say slightly different things to different audiences. The cost of not being entirely clear about what is reform and what is codification will be litigation. I hope that the Government will bear that in mind in future consideration of these issues.
	The other matter to which I draw the attention of the House has been mentioned several times—the business review. As the right hon. Member for Suffolk, Coastal (Mr. Gummer) said, the history of this part of company law is somewhat chequered and includes an extraordinary double reversal in the past couple of years, with the Chancellor of the Exchequer looking for a symbolic gesture to show his commitment to deregulation and big business, then a subtle reversal, with the position in the Bill being halfway back to where we started, but not quite, in our view, far enough.
	The problems in the Bill are, first, that the coverage of the review is not broad enough. The question is, not broad enough for what? Our view all along has been that one of the purposes of the review is to help ethical investors and ethical consumers, rather than just to help members of the company—shareholders for the time being—hold directors to account for what the company is doing at present. For us, the fact that only listed companies are covered is a problem. We think that ethical investors, and especially ethical consumers, have an interest in more companies than those that are listed.
	Perhaps a bigger problem—it is the biggest problem with the state of the business review as it leaves the House—is to do with auditing. That is, I think, the single issue that motivated the Chancellor to remove the original operating and financial review. Ministers frequently refer to the cost of auditing the business review—previously the OFR—but the auditing requirement is central to the utility of the review,for creating and helping to develop markets forethical consumption and investment. Only reliable information will help to create those new markets. We accept that that process will bring a cost to business, but we believe that the offsetting benefit of developing ethical investment and consumption far outweighsthat cost.
	The Bill will leave the House in a somewhatrough state—especially for a Bill that will have gone through its Third Reading in its second Chamber. Consideration has sometimes been very rushed—at times it has been close to shambolic. However, we all must accept responsibility for that, because I fear that the origin of the problems to do with the consideration of the Bill lies in the decision to use it as a consolidation measure, and not just as a reform measure. There is evidence in all parts of the House—there are fingerprints and traces everywhere—of all parties having been involved in that decision.
	If it had been recognised all along that the intention was to go for consolidation, we might have started our consideration of the Bill at a different time of year and have thought about having a carry-over provision for it. We did not do that. Consolidation and codification is, indeed, a good thing, as the Minister said: having a Bill that covers as much of company law as possible in one place is a good thing. However, if we had thought about this matter better in advance, we might either have started earlier, or have done the reform firstand the consolidation second at greater leisure. Nevertheless, speaking as someone who attended almost every Committee sitting and almost every debate on Report, I certainly do not want to start again at this stage, so I have no intention of opposing the Bill on Third Reading.
	I thank all those involved in discussions on the Bill, especially my hon. Friend the Member for Solihull (Lorely Burt), who supported me throughout in Committee and on Report, and my hon. Friend the Member for Cheadle (Mark Hunter), who also attended the Committee. I also thank the Liberal Democrat team in the House of Lords, who brought to discussions an extraordinary depth of experience of business. I pay tribute to the hon. Member for Huntingdon (Mr. Djanogly)—unfortunately, he is not present—who displayed an extraordinary degree of persistence and accuracy in his attempt to get to the technical heart of a great number of questions. I also thank the other members of the official Opposition Front-Bench team for their courtesy and good humour throughout the Bill's extraordinary progress.
	However, I thank most of all the ministerial team, and especially the Minister for Industry and the Regions, who has had to pick up, and learn to master, an extraordinarily complex and difficult brief in a very short period. Those of us who have dealt for a long time with company law—in my case, a quarter of my life, and I spent 10 years teaching the subject at university—have been very impressed by what a quick and accurate learner of this area of law she has shown herself to be. The rest of the ministerial team are more legally experienced, but they have shown themselves to be able to adapt quickly and well to a new area of law.
	I should also like to thank the Bill team and the civil service for the very helpful way in which they dealt with Opposition Members. It is perhaps unusual at a national level—it is rather less unusual in local politics—for there to be a good relationship between the civil service and Opposition politicians. That has been genuinely helpful in our effort to make genuine progress in getting legislation through this House.
	At one stage in the past couple of days, the hon. Member for Huntingdon said to me that he wanted to be involved in this Bill because, for a lawyer, it is a once-in-a-generation opportunity. That is true. Company law reform of this sort comes through Parliament very rarely, but I have to say that I expect we now both hope that it is a once-in-a-lifetime experience.

Michael Weir: I want to make a few brief points at the end of the debate. The length of the Bill has been commented on, and it is the biggest ever to go through the House. When I was a student—more years ago than I care to remember—I used to carry many legal volumes. I think that modern law students and lawyers must be thankful for the invention of the CD-ROM.
	We have heard a lot about enlightened shareholder value being the cornerstone of the Government's policy for company law in the 21st century. I believe that our system limits enlightened shareholder value, as the bulk of most large companies' shares are controlled by institutions or other large companies. The hon. Member for Rutland and Melton (Alan Duncan) dismissed problems to do with disclosure about how institutions vote, but it is a vital matter. Many of us do not hold shares as individuals, but the institutions to which I referred control our pension funds or other investments. If we are serious about ethical investment, we need to know how they deal with those matters on our behalf. One of the most important facets of the Bill is that it will give many small shareholders the information that they need to understand what is happening to their investments.
	A couple of days ago, I spoke to clause 173, which was presented as a way of improving directors' responsibilities in respect of the environment and other matters. As I said, the clause is a step forward, although it does not go far enough. We will have to revisit the matter, as the world is changing. I heard this morning that the Conservative party, like the Liberal Democrats, is discussing green taxes. I am sure that other parties will follow suit, which means that all companies will have to change. That will have a knock-on effect on how directors react and companies work.
	Another strand to the argument has to do with the proposed climate change Bill. If such a Bill comes before the House, that too will have an impact on companies. It does not contradict what has been achieved with this Bill to say that the climate change legislation must place a responsibility on directors to react to environmental issues.
	Finally, it has been noted that many clauses have not been discussed, although the huge number of clauses means that we would still be talking next Christmas if we had debated all of them as much as some would have preferred. However, we did not discuss the important new clause 3, which was due to be debated today. It deals with the liability of UK companies for the actions of their overseas subsidiaries.
	I raised the matter on Second Reading, when I said that the legal system in many developing countries is not sufficient to allow people to gain redress for the actions of companies. The Secretary of State said that he would be very reluctant to encourage widespread litigation in UK courts simply because remedies might not be easily available in some countries. However, if we as a developed nation are not prepared to give people the opportunity to take matters to court—and only a small number of UK companies would be involved—we are failing our responsibilities to the developing world.
	The Government argue that the Bill is not the place to deal with such matters, but it codifies the law affecting UK companies so, if it is not appropriate for the purpose that I have set out, what would be? We have been told that the Bill sets out company law in the 21st century but it has been noted often enough over the past few days that the world is changing. Companies have to change with it: issues to do with the environment and trade justice are much more to the fore, and companies need to reflect our changing times. This was the time and the place to tackle the issue, and to ensure that UK companies were at the forefront in accepting responsibility for their actions, and those of their subsidiaries, overseas. The best of our companies already do that; I stress that we are not talking about the majority of companies, who act responsibly in most areas. One of the problems is that people in many developing countries cannot easily get access to the courts. We have a well developed legal system, and a massive Bill on what our companies can do. We should have taken that extra step and allowed justice to prevail for those affected by the actions of some in the third world, and it is a shame that we did not.

Mike O'Brien: I thank all Members for their contributions, particularly those who were on the Standing Committee. Britain is part of a global economy. Nobody owes us a living in that economy, so we must ensure that we modernise our industry and our tax laws. As the hon. Member for Cambridge (David Howarth) said, we must modernise the hard-wiring of the economy, the company law, and we must get it right. That is what we have done during our consideration of the Bill.
	The Bill had a very long gestation—it was eight years in consideration, and the company law review looked into all aspects of company law. Initially, the legislation was the Company Law Reform Bill, and it then became a consolidation Bill. We have struck the right balance between ensuring that we build on the need for an enterprise economy and introducing the right element of regulation. We thus create fairness for shareholders and allow them better control over the companies in which they invest. Rightly, in addition to considering those issues, we looked into the subjects of animal rights and terrorism, and some of the other problems that the hon. Member for Beckenham (Mrs. Lait) identified in her contribution.
	I thank all those who have contributed, particularly my noble Friend Lord Sainsbury and my right hon. and learned Friend the Attorney-General, who spoke in another place. I thank my right hon. Friend the Minister for Industry and the Regions for the way in which she piloted the Bill through its stages. It is a major reform that modernises Britain's company law, and it will make our economy stronger. In no small part, that is thanks to her dedication and effort in ensuring that the Bill becomes law.
	 Question put and agreed to.
	 Bill accordingly read the Third time, and passed, with amendments.

John Gummer: I wish to discuss national health service provision in Suffolk as a whole, and in my constituency of Suffolk, Coastal, in particular. I begin by making two points to the Minister. First, I recognise that additional funds have been put into the national health service—indeed, I not only recognise the fact, but support it. Secondly, I recognise his good faith and the fact that he has shown competence and directness in handling the issues of the national health service since he took over the job. For that reason, I hope that he will not take some of the hard things that I will say personally, or as a comment on what is happening across the country.
	My case is that Suffolk has particular problems that are clearly not of our own making, or the making of the people whom the Government have put in charge of our national health service. The key figures are simple. In the pecking order of 304 primary care trusts that, until recently, were in operation, Suffolk Coastal was 210th, receiving 91.5p against a standardised average of 100p. However, if we look at the number of over-65s in the 646 UK constituencies, we see that my constituency ranks 16th. My Suffolk, Coastal constituency and Suffolk Coastal PCT are not entirely coterminous but, to all intents and purposes, that is a perfectly reasonable comparator. As age is the biggest determinant of need in the health service, one would expect a rough correlation between areas with a higher proportion of old people—22 per cent. of my constituents are over 65, many of them are very old indeed, and a high proportion live in single-person households—and areas where the NHS receives an above-average sum from central Government.
	The correlation would not be exact, as there are other issues to take into account, but there is a serious mismatch between my constituency, which is ranked 16th of 646 constituencies, and the PCT, which is ranked 210th of 304. That is neither right nor sensible. The fundamental problem is not one of spendingbut of under-resourcing. The way in which the Government hand out money makes it impossible to provide even an average service, as we receive less than average per head. The figures are even tougher for Suffolk as a whole, as the county receives 82 per cent. of the average funding, even though the average age of the people who live there is at the upper end of the spectrum.
	The Government's own quango, the Countryside Agency, which is responsible for dealing with the countryside, has pointed out that rural provision costs 70 per cent. more than urban provision. The cost of health cover in rural areas is 74 per cent. greater than it is in most urban areas. As the area is almost entirely rural, the funding arrangement is not sensible. On the Government's own figures, it ought to receive a higher than average sum, not a below average sum. It is not just one PCT or one hospital that has overspent its budget over many years but every PCT and hospital.
	To misquote Lady Bracknell, for one PCT to overspend might be thought an accident but for every PCT and hospital to overspend must be considered carelessness. The question is, whose carelessness? It is not, I submit, the carelessness of the heterogeneous collection of people appointed by the Governmentto run our local services—it is the Government's carelessness in a number of specific instances. The amount of money accorded to those institutions is unsatisfactory. Every indicator suggests that we should receive more than average, but the Government have decided to give us less than average. Every indicator suggests that it is more difficult to provide services in that part of the country, but the Government have decided that it should receive less than other areas.
	Everybody knows that old age is the major indication of need for help by the national health service, but the Government have decided that it is not suitable as a proper reflection of the situation when it comes to deciding what the resources shall be. They have changed the way in which they measure by reference to a deprivation index. I am all in favour of that, except that that it is what is necessary for a preventive health service, yet we have an acute health service. Perhaps the Minister would like to have something different, but that is what it is. That means that we have to try to determine the real measure of the need for acute services: again, it is age that really matters.
	So who is being careless? First, the Government are being careless because their method of sharing out the money detracts from the ability of anyone in Suffolk to deliver the service that should be delivered. Secondly, the people whom the Government have put in charge are being careless. I do not know what the strategic health authorities do for their money. When one asks them whether their purpose is to represent to the Government the needs of their areas, they say no—that is down to Ministers. If one asks them whether it is to keep the PCTs within their spending limits, they say no—that is down to the PCTs. When we ask Ministers what their purpose is, they tell us that they are supposed to keep the local PCTs, hospital trusts and the like within their spending limits. Why the blazes, then, was the PCT overspending with no reference to the strategic health authority?

John Gummer: My meetings with those at the strategic health authority, which were wrung out of them—their incapacity to respond to Members of Parliament is legendary—led me to be even more depressed than I had expected due to their inability to answer any of my questions.
	Irrespective of the Government's carelessness in not reforming the method of handing out the money, if the strategic health authority had been doing its job it would have stopped the overspending of all PCTs and hospital trusts—that is what it must be there for. The fact that it did not beggars belief. But do the Government fine it? Are they placing on it the responsibility for paying the debts? No—not at all. It is still there, hectoring, except that it now has an even bigger remit—a larger area to fail to administer and to be an authority for.
	It is of course unfair to ask PCTs to provide 100p-worth of services for 91.5p-worth of resources—although it is not really 100p-worth because it should be providing what would cost 72 per cent. more, according to the Government's own figures from the Countryside Agency.
	Primary care trusts should therefore probably provide 110p or 115p-worth of services and it is hard to ask them to work on the basis of 10, 15 or 20 per cent. below the resources that they should have. Even so, that is their job. It is why they are paid and why they are there. They are accountable to no one except the Government.
	The Government appoint PCT members, although there is an arm's length organisation that finds hitherto unfindable people who serve on the boards—most of them unknown to the people whom they represent. None of the non-executive members of our strategic health authority comes from Suffolk or Norfolk, which are two of the largest affected counties. None of them knows about our specific problems. However, they are appointed by the Government. If the appointments commission proposed someone unsuitable, such as me, I doubt whether the Government would confirm the appointment. I have some names that I would like to suggest to the Minister but he will not accept them because the Government want people who kowtow first to the authority and then to them.
	The Government, having got the sort and class of people they want—those who do what the Government demand and do not stand up for local people—find that their appointees cannot deliver the goods. Do they fine them? Do those people have their salaries reduced or removed? No. The Government reappoint them and fine my constituents. They say that, because people had more money spent on them in the past than the figures suggest should have been spent, present and future generations must pay.
	Waveney PCT was close to paying all its debts and was in credit on a year-on-year basis. However, the Government decided that, far from helping it with the extra money that they promised, it will be fined to help pay for other people whom the Government have failed to control.
	The Government are fining my constituents—what is the result of that? It means that NHS provision in my constituency is worse than it was 25 years ago when I was first elected. If the Minister finds that surprising—and it is surprising, given all the extra money—let me explain. In November, the Bartlet hospital, which is a community hospital—the Government have decided to find £300 million to increase the provision of such hospitals—will be closed. The building was presented to the people of Felixstowe through the honourable work of doctors who wanted to provide beds for those who came out of hospital and needed to convalesce. It was especially important for people who live in rural areas and find it difficult to go back to their homes, which are often unsuitable for those who are disabled, at least for a time. Many of them are elderly. People in that part of Suffolk, which I did not originally represent, will no longer have the Bartlet hospital. Some refurbishment will occur in Felixstowe general hospital but there will be a lack of beds for rehabilitation and aftercare, which has existed for all those 25 years.
	Let us consider Ipswich hospital. I am glad that the hon. Member for Ipswich (Chris Mole) is present. We have had little support from him in our battle for Ipswich hospital and that is sad. If Ipswich were represented today by Jamie Cann, Ken Weetch, Dingle Foot or Richard Stokes—four fine former Labour Members of Parliament—they would have been battering on the Minister's door. The Minister would hardly have been able to move without their saying, "Do something about Ipswich hospital." Perhaps the hon. Gentleman has conducted a secret battering, but we have had no support for our fight for Ipswich hospital. I am pleased that the hon. Gentleman is here because I can give him the figures—I do not think that he knows them. He has certainly not protested about them in our local newspapers. There are going to be 357 redundancies at Ipswich hospital. That figure was confirmed this morning by the hospital's chief executive, and it represents 10.1 per cent. of the work force.
	Hon. Members who have listened to the Leader of the House try to explain away the redundancy figures in the national health service will realise just what that means. It is no good the Minister looking throughhis papers to try to explain how they will notbe compulsory redundancies. It is funny how redundancies are no longer called that. All sorts of other phrases, such as "readjustment of staff", are used.

John Gummer: Indeed. So far as my constituents are concerned, however, this is going to be a 10.1 per cent. reduction in the work force, and that will include 31 nurses. There are 100 job losses at Ipswich for every nine in Peterborough. That shows the pressure on Ipswich hospital, which serves my constituency and those of my hon. Friends the Members for West Suffolk (Mr. Spring) and for Bury St. Edmunds (Mr. Ruffley), who have fought a noble battle in the absence of any support from the Member of Parliament who ought to be out there on the streets with us.
	There are problems not only in Ipswich but in Aldeburgh, a town of some 2,500 people—a bit more if we include the villages round about. Five hundred of those people are over 65 and living on their own. The Aldeburgh cottage hospital—now the Aldeburgh community hospital—is exactly the kind of community hospital that the Secretary of State is supposed to be in favour of. Aldeburgh has halved the number of beds, even though people in the locality have raised a considerable amount of money in recent years to provide them. Those beds were serving the community; now they are not. Of course, we are told that this is because of a redesign of services.
	That redesign of services is based on the premise that there will now be carers in the community, and that the social care system will be able to go out there and look after people. This illustrates what I mean about the decline in the service that is being provided. Any sensible reorganisation would have put the care in the community in place first, and reorganised the hospitals second. If this had not been a matter of saving money, that is how it would have been done. When I talked to people in Ipswich hospital today, as I have done over many months, they made the point that they were happy to move to new frameworks and systems, but that they did not want to move to the new one after the old one has been closed. We should keep the old one until the new one is seen to be working.
	The Minister is unfortunate in that he does not spend much time in my beautiful constituency. It has74 miles of coastline and more than 100 communities, it is very lovely and it is a long way from anywhere. That is a very good thing. In my constituency, however, there are very few carers. The Minister's whole argument is based on the premise that enough carers can be found, but I have to tell him that people who pay for carers with their own money cannot find them. There are not even enough carers to meet the present demand, although there is still the full number of beds in the Bartlet and at Aldeburgh.
	My neighbour, my hon. Friend the Member for Central Suffolk and North Ipswich (Sir Michael Lord), is not able to participate in this debate because of his position as Deputy Speaker, but he has exactly the same problem in the Hartismere hospital, which I used to represent. That hospital is also under threat, and it will certainly not continue as it is. It will probably be put out to some kind of privatised arrangement, and it might be closed altogether. The fact is that, yet again, we are discussing another community hospital serving an area where carers are almost impossible to come by.
	If one in five of the population is already over 65, it is not surprising if it is quite difficult to find carers. That is why the situation is worse today than it was25 years ago. But of course, it is worse too because then people could go to All Hallows hospital in Ditchingham, just over the border, where Anglican nuns have been caring for people in the most exemplary manner for a very long time. That is to be stopped: the respite and palliative care for the terminally and incurably ill is funded partly through the primary care trust and partly through contributions, but the PCT is withdrawing funding. That threatens the whole service.
	The service is worse than it was 25 years ago, and I am sure that the Minister will want to apply that to the whole service, because 25 years ago if people needed a doctor in the night, they could get one. Then, we had a domiciliary calling service. Try that today. On dentistry, 25 years ago, I never had complaints that people could not get on the list of an NHS dentist, but now, of the 14 dental practices in Suffolk, Coastal, only one is taking on new NHS customers. So, I wrote to the Minister's predecessor, who did something that I do not think this Minister would do—he wrote me rather a nasty letter saying that I could have found out about that myself by getting in touch with NHS Direct.
	I had written about a constituent in Felixstowe who was unable to get on a list for an NHS dentist. That Minister sent me a list of eight NHS dentists who were, he said, within 10 miles of my constituent's home. Four were within 10 miles and they were indeed NHS dentists, but none was taking on new patients, at least for the moment. I looked with enthusiasm to the other four, only to find that they were all in Frinton.
	NHS Direct does not realise that there is a river between Felixstowe and Frinton or that it is some50 miles to Frinton and 50 miles back. Unless people can swim, they cannot get an NHS dentist in Felixstowe. This Minister has to bear the brunt of the fact that we in my part of the country do not believe that NHS Direct understands.
	What makes the difference? Why do we not get the money? Why have our community hospitals not had any of that £300 million? Why are our community hospitals closed? Why are other community hospitals kept open? Could it be that the one thing that distinguishes most constituencies in Suffolk is their political representation?
	I was chairman of the Conservative party, and during my chairmanship I would neither have asked, nor been allowed, to play any part in the decisions on the closure of hospitals. I have talked to my colleagues who have been chairman of the Conservative party and they assure me that the same was true of them.
	I spent some eight or nine years as a Cabinet Minister. As Secretary of State for the Environment, I would no more have allowed a political person to come in and decide how I would work out the money for local authorities than I would fly. The same was true of deciding whether to close or open MAFF offices when I was Minister of Agriculture, Fisheries and Food. I would have considered that dishonourable and wholly unacceptable.
	Indeed, when I was making decisions on supermarkets and out-of-town development, I remember insisting that my officials remove the names of the supermarket companies, because one naturally had those that one liked and those that one did not. I believed it proper always to make those decisions at arm's length.
	I am not in any way criticising the Minister, but when we discover that hospital closures are discussed by Ministers in the presence of the chairman of the Labour party, the right hon. Member for Salford (Hazel Blears), we must think seriously about a connection between political representation and the closure or opening of community hospitals. That connection has been made clearer by the list produced by  The Times. Surely it is not a matter of accident that all the closures have been in Conservative-held seats, except for a small number in Liberal Democrat-held seats. As I understand it, none of the closures so far has been in a Labour-held seat. I hope that the Minister will tell us how much of the £300 million is earmarked for Hartismere and Aldeburgh, the two community hospitals left in central and eastern Suffolk.
	What is the effect of all that on the confidence of my constituents? We have an older population than almost anybody else, and we get less money. We have a more expensive service than almost anybody else—that is on the Government figures—and we get less money. We have a real problem with one-person households over the age of 65, and we get less money. All our PCTs and hospitals have gone into the red and have historicdebts to pay off. The Government have taken no responsibility for that at all. All they have done is make our situation worse by fining Waveney, which had got itself into the right position, and, as far as the rest of us are concerned, by forcing people to pay back the money in a single year.
	I therefore have five simple questions to put to the Minister. First, of the four community hospitals, Beccles, Lowestoft, Halesworth and Southwold, none of which is currently threatened, two are in the constituency of Suffolk, Coastal held by the Conservatives, and two are in the marginal constituency of Waveney, which will not be held by the Conservatives until after the next election. Will he therefore accept that we will watch carefully to see that all four remain open and that a choice is not made on the basis of political representation or the nature of marginal seats?
	Secondly, will the Minister agree to go back, look at the debts and recognise that the local PCTs are underfunded? To enable them to return from their current terrible base to some kind of service that equates with what was there 25 years ago, and certainly that equates with what the Labour Government would no doubt say they are proud to have achieved in other parts of the country, will he agree that those debts will either be cancelled, as has happened in a number of cases, or paid without penalties over the next five years?
	Thirdly, the Minister of State, Department of Health, the right hon. Member for Doncaster, Central (Ms Winterton) told the strategic health authority that the old services would not be closed before the new services were in place. In front of me and the hon. Member for Ipswich, who was present on that occasion, she said clearly that that was what should happen, and the SHA said that it could not happen, because it did not have the money. Will the Minister therefore accept that the services will not be closed until working replacements are in place throughout the county of Suffolk?
	Fourthly, will the Minister consider the appalling position of midwives? It will now be almost impossible for women to have babies at home in many rural parts of Suffolk because of cuts, reduction in grading and the fact that that is another area in which savings can be made.
	Finally, will the Minister promise me that he will talk to Suffolk county council about the pressures that are now being exerted on its social services department? The department is already hugely overspent, and has already been cut because of the Government's pusillanimous post-election arrangements for the county council. Will he promise to sit down with members of the county council and establish what extra help it can be given to deal with the situation with which it has been left after the closure of so much of Suffolk's heath provision?
	I have said all that without going into the detail of the appalling cuts affecting those who are least able to defend themselves, the mentally handicapped in my constituency and elsewhere. I must tell the Minister that I cannot think of a circumstance in all my years as a Member of Parliament in which I have seen a national service that is much prized, much loved and much depended on destroyed by an accounting system that is manifestly bent away from the needy in Suffolk.

Richard Spring: I congratulate my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer). I hope that the Minister heard the genuine passion in his speech. It is shared by the other Conservative Members in the county, all of whom face the same huge problem.
	Let me take this opportunity to pay tribute to the staff of the NHS in Suffolk. My right hon. Friend talked of the staff cuts at Ipswich hospital. My hon. Friend the Member for Bury St. Edmunds (Mr. Ruffley) knows from his constituency what is happening at West Suffolk hospital. I can tell the Minister that the collapse in morale among wonderful, caring professional people—our nurses, doctors, ancillary workers and community nurses: all those who make the NHS work—is devastating. They come up to us in the street, sign petitions and take part in marches. They simply cannot understand that in this country, the fourth richest in the world, we are seeing the decimation of something that is of great value and cherished by the people of this country: our national health service.
	I think the Minister will agree that the clergy are not always ready to come forward on issues that may be controversial. I have lived in the county of Suffolk for a long time, and I am sure that my right hon. Friend finds the same. But the clergy in the western part of Suffolk were so horrified by what was happening to the health service that, as a result of pressure from parishioners who approached them expressing concern about the decimation of services, a petition was organised throughout western Suffolk and signed by more than 1,000 people. I believe that that is unprecedented in the history of our county.
	I became a Suffolk Member of Parliament in 1992. At the time there was a discussion about reorganisation, and I witnessed the disappearance of West Suffolk health authority. I was told that it was necessary for reasons of economies of scale, procurement and all the other things that would benefit a larger, pan-Suffolk health authority. Not many years ago, against the professional advice of people in the NHS and the county and, indeed Members of Parliament, five primary care trusts were created—all with their chief executives, staff and headquarters, and with all the attendant costs—allegedly to bring health services closer to the people whom they served. Well, of course, we then landed up with three PCTs. And now, guess what? We are back to square one and to having only one PCT. Why? Because creating services allegedly close to the people somehow has not worked. We are now back to large-scale procurement, economies of scale, cheaper purchasing and all the rest of it.

Richard Spring: I will come on to the question, you bet, of new offices.
	My right hon. Friend the Member for Suffolk, Coastal talked about the funding formula. I happen to have been a member of the Health Committee before 1997, and I think I have understood something about the funding formula for the NHS. When there was a change of Government and the funding formula was modified, my hon. Friends the Members for BurySt. Edmunds (Mr. Ruffley) and for South Suffolk (Mr. Yeo) went to see the then Secretary of State for Health to point out the very issue that my right hon. Friend has talked about—the impact that the funding formula would have in areas where the age profile of the population was older than in many parts of the country. He gave the assurance that it would be monitored and since then, as the Minister will confirm, there have been many changes which have further enhanced the gap between the so-called deprivation index and the age profile. This is at the heart of the problem.
	In 2007-08 in my constituency the per capita spend on the NHS will be £1,156. In the Prime Minister's constituency it will be £1,576. That is a £420 difference, up from £391 in the current year. The figure in my constituency is comparable to that of my right hon. Friend the Member for Suffolk, Coastal and my hon. Friend the Member for Bury St. Edmunds and is well below the national average, for the reasons that my right hon. Friend described. Of course, that is at the heart of the problem. The funding formula is skewed in a way that has made the adequate funding of the NHS in Suffolk well nigh impossible.
	We have heard something about the strategic health authority. I invited members of the SHA in the first instance to come to London to talk about what very obviously two years ago was going to be a crisis in our county. They came, and I well remember the meeting because there was definitely an atmosphere of "You Members of Parliament are being hysterical. We are carefully watching the situation." They showed the most extraordinary complacency. However, something must have dropped—the penny or whatever—because only a few weeks later the chairman and chief executive resigned. Perhaps they had begun what they should have done, which was to look at the figures for what was going on in the county, and they did not want to be around when something started hitting the fan.
	We had another meeting subsequent to that, with the new chief executive. I remember the atmosphere there as well. It was extremely aggressive. "We are sorting this out", they told us. They had recovery plans. The idea that there would be massive deficits was a huge exaggeration, because the authority had the matter under control. That simply was untrue. At the most recent meeting there was an admission of total despair and an acceptance that everything that we had forecast to the SHA had materialised. If a strategic health authority could not look at the figures from all the PCTs in the then three counties under its control and see what was so screamingly obvious to the Members of Parliament and which it should have picked up—that a crisis was developing—I have no understanding of what SHAs exist for. They simply have not been doing their job. That is exactly why they should have no right to exist. They are now conducting an exercise to look at the future of our acute care services in the region. I simply dread to think what they will do, given the performance that we have suffered from these people in the past.
	Let me deal with the extent of the deficits. The county of Suffolk has some 650,000 residents. It seems to me as we look at the figures that the current deficit in the county is about £64.5 million—the cost of the creation of the new PCT. That includes the health trusts and the hospitals. We know, for example, that Suffolk West PCT has passed on a deficit of£16.1 million to the new PCT; and we know that in the east of Suffolk, the PCTs have passed on a total deficit of—
	 It being Six o'clock, the motion for the Adjournment of the House lapsed, without Question put.
	 Motion made, and Question proposed, That this House do now adjourn .—[Mr. Heppell.]

Richard Spring: The deficit in east Suffolk is£35.4 million, with the deficit in the West Suffolk hospital trust at £14.4 million, leaving a total of about £50 million. We understand—and my right hon. Friend the Member for Suffolk, Coastal will know that the information has been checked and published—that the shortfall in the Ipswich hospital may reach something approaching £50 million in the course of next year. We are therefore talking about a huge emerging deficit on top of the existing one and the possibility of some so-called user charge of 10 per cent. That would mean a staggering deficit in the region of £100 million.
	I shall put a further point to the Minister. We hear about savings, but it is rather like putting something that costs £1 up to £1.50, then reducing it to £1.40 with an announcement of a 10p saving. That is exactly the logic of the situation. There have indeed been attempts to make savings, but the pattern of deficits—both current and, in particular, historic—has continuedto rise.
	We have had some discussion of rehabilitation beds and I must say that I took some comfort from the Secretary of State's remarks that community hospitals should not close on short-term financial grounds. Newmarket hospital in my constituency, for example—a 10-year-old hospital that is much valued and cherished by the local community—is in danger of losing its rehabilitation beds. The bed spaces have to be used because of the repeated crises happening at the West Suffolk PCT and at Addenbrooke's—almost constantly on black and red alerts. In those circumstances, they have to move people into the bed space simply to accommodate individuals.
	In respect of the Newmarket hospital, 1,000 people marched in protest at the removal of these beds and a massive petition was organised. The problem is well known to everyone who works in the hospital, where morale is, of course, extremely low. As my right hon. Friend rightly said, if the beds go, it is a fantasy to suggest that there are appropriate support structures in the local community. There are already not enough carers and the idea that somehow this is all about modernising care or bringing it into the 21st century with all its support structures is simply untrue. We have heard the warnings from Lord Bruce-Lockhart about the pressures on social care budgets all over the country in the forthcoming year. Why has all this happened? It is partly to do with the funding formula, but it is difficult to get proper and adequate information about the real extent of the deficit. The proof of the pudding lies in the cuts in services and the sackings of staff.
	We now have a new Suffolk PCT and the first thing that it did was to create a new headquarters—an interesting decision. If a family is in great difficulties, it does not move house, but makes do. I make that point very simply and we look forward to a meeting with the new chief executive of the new PCT, at which a whole series of important questions will be asked.
	In conclusion, the Minister should recognise that it is a truly extraordinary situation when people who believed that the health service would protect them find that it is being demolished in front of their eyes. Of course there have been some improvements in aspects of primary care and I accept that there have been improvements in other spheres, but our acute care services are under threat and it now looks as if our community beds are very much under threat. The deficit and the debts come together to create an impossible situation. Ultimately, the problem comes down to fairness. It is about fairness to people living in Suffolk who are watching what is happening to their health service and who look at other places where the funding formula does not have such a negative effect. They feel that they are being treated extremely unfairly.

Chris Mole: Thank you, Mr. Deputy Speaker. As you may gather, it was not my intention to intervene in the debate, but given the length of time available I want to address some of the issues that have been raised.
	I am particularly concerned about the co-ordinated attack that has been made, because I was the victim of such an attack from Conservative Members when I was the leader of Suffolk county council. They cloned a debate from Kent, in which the county council had been attacked by Kent Tory MPs, so it is a pity that such an attack has been made again today.
	The comments of the right hon. Member for Suffolk, Coastal (Mr. Gummer) were unfortunate, especially because, as a constituency MP, I have regularly engaged with my health trusts—the Ipswich primary care trust, which was the predecessor to the Suffolk East PCTs, the Ipswich Hospital NHS Trust and the Suffolk Mental Health Partnership NHS Trust—and my understanding is that until some of the events described, the right hon. Gentleman had not set foot in Ipswich hospital for some years. The partisan comments we have heard this evening are regrettable; they have avoided a balanced look at developments in our local health economy.
	We have heard nothing about what has happened in terms of key issues for many of our constituents, such as waiting times for elective surgery at Ipswich hospital. In April and May last year, more than 500 patients had been waiting more than six months. Unfortunately, the hospital has not yet met its target; at present, one person has been waiting for more than six months for elective surgery. At the same time last year, more than 500 out-patients had been waiting more than 13 weeks from their visit to their GP to their first appointment. However, I am pleased to say that the number is now zero; none of our constituents are on that waiting list.
	We need to be honest about the situation. Clearly, there are financial challenges that all trusts have to address, but we must not wrap all the service changes into them. It is unfortunate that we have heard some rather head-in-the-sand observations, more focused on buildings and beds than outcomes for patients—the sort of things that our constituents expect us to deliver across the public service remit: not bricks and mortar, but services.
	There are changes in the nature of surgery, such as day surgery. In the past, a day's preparation and several days' recuperation in an acute hospital were needed; nowadays, the procedure can be completed in 24 hours and the patient is back where they want to be—at home—as soon as possible. That reduces demand for the number of beds in an acute hospital such as Ipswich hospital and for the number of operating theatres, some of which, according to the hospital management, have been running at as little as 50 per cent. capacity recently.
	We need to be responsible, to face up to the realities of some of those changes and to ensure that, when people move on from hospital, they get the support that they want. It is not necessarily just about social care, which was the focus of some of the comments from Opposition Members. The important thing is the intermediate health care that follows somebody's time in an acute hospital. Given that focus, I suppose that it was not surprising that there was no mention of the£2 million developments in intermediate health care and the opening of the new Bluebird Lodge in my constituency, which is designed to provide modern, 21st century facilities for all sorts of patients, including older people. There is a particular focus on physiotherapy and active engagement. By that I mean not just letting people sit in what might be termed a recuperation hospital, but possibly in an old Victorian establishment that does not meet people's needs in the 21st century and where people do not get active intervention to allow them to lead independent lives.
	I will mention the social care situation, because it is clearly important and, to a degree, it is a linked issue. During the 12 years that Labour was in leadership in Suffolk county council, the number of home care packages was expanded enormously. The number had been cut under the Conservatives up until 1992. It is, of course, disappointing that the instant that Suffolk county council returned to Conservative control, those resources went backwards again, as other choices were made about spending on rural minor roads or whatever.
	I am not prepared to stand here and hear our health services done down by the Conservative party. If any of the Opposition Members had made the effort, as I did, to ask about the relative per capita funding of our trusts in Suffolk, going right back to 1987, under the old Anglia and Oxford region, which I am sure that the right hon. Member for Suffolk, Coastal will recognise from his days in government, they would know that that trust was funded below the national average at exactly the same level as the situation today. As I am sure that the Minister will explain, the formula recognises the needs of older people, as it does the needs of those who have disadvantages in their health.
	Let us look at what has been happening at Ipswich hospital. I mentioned some of the service performance improvements, but there are some tough decisions being made. It is particularly regrettable that there have to be some reductions proposed in the specialist nurse services, which, apparently, the hospital is not commissioned to provide. At the same time, other changes are being made to the clerical and administration posts and to consultant secretaries. All those things are making significant contributions to the savings that the hospital needs to make to get into balance, as it has always been required to do statutorily.
	Despite all that, we want to see a health service that is fit for the 21st century. I welcome the fact that, among the developments, is our brand new linear accelerator at Ipswich hospital, which is improving the delivery of cancer services—they are among the best in the UK. My constituents have only to drive by to see the construction of the brand new Garrett Anderson building, which will provide new accident and emergency services.

David Ruffley: Will the hon. Gentleman join me and all those who are served by district general hospitals in Suffolk and Norfolk to fight any cuts to accident and emergency services, which, if the rumour mill is to believed, could well be the result of the strategic health authority review that is due by the end of the year? Will he join me in the fight to save A and E services in our district general hospitals, especially in Ipswich and West Suffolk hospitals?

Andy Burnham: I congratulate the right hon. Member for Suffolk, Coastal (Mr. Gummer) on securing the debate. I know that he pays a great deal of attention to the issues that he raised, and I do not doubt the sincerity with which he brought them to the House. I know that many people in Suffolk will be watching this debate and looking at its outcome, so I also thank the hon. Members for West Suffolk (Mr. Spring) and for Bury St. Edmunds (Mr. Ruffley) and my hon. Friend the Member for Ipswich (Chris Mole) for attending.
	Like the right hon. Member for Suffolk, Coastal, I want to congratulate NHS staff in Suffolk on the hard work that they have put into improving services and performance. Thousands of people are receiving high-quality care and safe services each day. The best of the NHS in Suffolk is among the best health care in the world, so we should all be proud of its achievements.
	We are midway through a 10-year NHS plan. The achievements that the NHS is making nationally are outstanding. Waiting times for in-patient treatment have fallen to 26 weeks, compared with 18 months or more in 1997. The maximum waiting time for an out-patient appointment with a consultant has been halved to only 13 weeks, and 98.8 per cent. of patients are now seen, diagnosed and treated within four hours of arriving at an A and E department, as my hon. Friend the Member for Ipswich said.
	I set out that context because although I was grateful for the kind words of the right hon. Member for Suffolk, Coastal as he opened the debate, I felt that there was a significant lack of balance in his contribution and that of the hon. Member for West Suffolk. Wild claims were made about the state of the national health service in the region. I do not believe that the claim that the NHS is worse than it was25 years ago can be backed up by evidence. I will substantiate that remark, but I urge the right hon. Gentleman, who is an experienced parliamentarian for whom I have a great deal of respect, to consider whether several of his claims reflect the reality on the ground in his constituency. All the achievements to which I referred are being carried out in his constituency.
	In some ways I will now go off my script. I took it that the crux of the contributions made by the right hon. Member for Suffolk, Coastal and the hon. Member for West Suffolk was the funding formula, so let us deal with that head on. During his speech, the right hon. Gentleman said—I think that I quote him correctly, but if I do not, I am sure he will put me straight—that old age should be the major indication of need in the national health service and that his area should thus get more than average.
	May I refer the right hon. Gentleman to a document that his own party produced in the past month, which called for NHS funding
	"to accurately reflect the burden of disease"?
	That is a direct contradiction of the argument that he put to the House. The burden of disease does not equate to old age. Indeed, longevity may be a sign of good, not bad, health.
	Let us consider some of the differences in the burden of disease. I take my constituency as an example, to make the comparison real. In my constituency, the cancer mortality rate per 100,000 for people under the age of 75 is 134. In Suffolk, Coastal the corresponding figure is 102. The coronary heart disease mortality rate per 100,000 population for people aged under 75 is 83.80 in my constituency and 35.52 in Suffolk, Coastal. The incidence of stroke among the under-65s is 11.72 in my constituency and 5.04 in Suffolk, Coastal. The Conservative party is telling the Department of Health that health funding should follow "the burden of disease". From those figures, the right hon. Gentleman will see clearly where that burden lies.
	What is the claim made by all the Conservatives Members who have spoken in the debate? Is the claim that health funding should not follow the burden of disease—should not go to where the need is greatest—or that it should? I am genuinely confused about the position of the Conservative party on the issue, which they said was the crux of the debate.

Andy Burnham: The Black report was not recognised by the hon. Gentleman's Government. That ground-breaking report on health inequalities was not recognised. That is why there are health inequalities that still shame this country and why there is an unacceptably large gap in life expectancy between parts of the north and parts of London. The lowest male life expectancy in the country is in Manchester. There is a gap of some eight, nine or 10 years between parts of London. Health inequalities have not been adequately recognised. That was the point of the Conservatives' document, but this evening I hear a different argument played out to me.
	Let us be clear. The claim was for more money for the PCT, but the document says something different. If we followed the logic of the document on the basis of the figures that I gave, there would be more money going to other parts of the country, rather than less. I do not go along with that argument. We need a balance across the system, but we must recognise where ill health is greatest.
	At the last general election each and every one of the Opposition Members present stood on the patient's passport proposal. Each and every one of them voted against the national insurance increases to help fund the national health service. Is there not a twinge of shame that in their contributions there was not a jot of recognition of the stance that they took and what that would have done to health services in Suffolk, had we listened to the Conservative party? Is there not a minute when the words ring a little bit hollow and they feel a little ashamed of some of the claims that have been made? I would, if I were in their place.
	The right hon. Member for Suffolk, Coastal claimed—to borrow his words—that they are not getting any money, or anything else, and that the decisions are all political. There was no mention of the £1.4 million that is being invested in Felixstowe to turn the old general hospital into a modern community hospital, which will include a day treatment centre,16 in-patient beds, musculoskeletal services and a range of other clinics and services. Work is due to commence on that project next month—on 7 November, I believe—but there was no mention of that in the right hon. Gentleman's contribution.
	The hon. Member for Bury St. Edmunds (Mr. Ruffley) did not speak for long, but I did not hear any mention of the £600,000 in capital and revenue that is being invested in Mount Farm surgery in Bury St. Edmunds, enabling 3,000 more patients to register with the surgery and to have access to an extended range of services. That backs up my point that there was no balance in the remarks that were made. Real improvements are being made on the ground in the hon. Gentleman's constituency. It is misleading to claim that everything is being done according to a predetermined political agenda and that no investment is being made.
	I turn to some of the more general points that were made about funding as a whole. The NHS is in receipt of record resources because of the Government's funding policy. Funding has increased from a little over £34 billion in 1997-98 to more than £69 billion in 2004-05. It will increase further still, to £92 billion, in the next financial year.
	NHS organisations have always been expected to plan for, and achieve, financial balance each and every year. If the Opposition are claiming that there should be no financial rigour in the system—that organisations should be able to spend more than they receive—that is an interesting position to adopt, but it is not one that we will follow. It must be said that the current financial situation in Suffolk cannot be attributed to a lack of funding. The four primary care trusts in Suffolk collectively received allocations of £659 million for this financial year. The NHS is required to generate a break-even position in 2006-07. All NHS organisations—including, of course, those in Suffolk—are expected to achieve run-rate balance by the end of this year.
	It does not help local people's understanding of the difficulties and pressures that all health systems in developed countries are under when wild claims are made about a particular situation. I think that I heard the hon. Member for West Suffolk, who made a long speech, say that he expected there to be a £100 million deficit next year.

Andy Burnham: I have just a moment left.
	The right hon. Member for Suffolk, Coastal asked me five questions and I will write to him in detail on all of them. On the question of Suffolk county council, which he mentioned, my hon. Friend the Member for Ipswich was absolutely right. While social care does need the funds to provide an adequate level of service throughout the country, the right hon. Gentleman should perhaps talk to his colleagues on the county council to ensure that they give sufficient priority to social care and deliver the services that we all wantto see.
	This has been a long debate and we have covered a lot of ground. I am grateful for the opportunity to put some facts on the record, because I believe that they were severely lacking in the contributions that we heard this evening.
	 Question put and agreed to.
	 Adjourned accordingly at half-past Six o'clock.